Applied sciences Inc. posted its second consecutive quarter of large losses, as the web house-flipper continued to lose cash on houses it bought final 12 months.
The corporate mentioned it had $2.9 billion in income from promoting 7,512 houses within the fourth quarter, down 25% from the identical quarter a 12 months in the past.
The stability of these gross sales left Opendoor with a internet loss, measured in keeping with typically accepted accounting rules, of $399 million for the fourth quarter, or 63 cents a share. The web loss for a similar quarter in 2021 was $191 million, or 31 cents a share. Opendoor’s loss for the complete 12 months of 2022 got here in at $1.35 billion.
Analysts had anticipated a internet lack of $533 million within the fourth quarter of 2022, in keeping with FactSet. Shares of Opendoor fell 1.6% to $1.82 a share on Thursday forward of the outcomes, and so they had been basically flat in early after-hours buying and selling. They’ve fallen greater than 80% over the previous 12 months.
Opendoor is an iBuyer, or an organization that makes use of synthetic intelligence and different know-how to assist it value and purchase 1000’s of houses, then goals to revenue by promoting them once more inside just a few months.
Opendoor executives have attributed lots of the firm’s losses to its resolution to honor buy contracts they signed earlier than larger rates of interest started throttling the housing market final 12 months.
The corporate has since offered about two-thirds of these houses, bought final spring, in keeping with the fourth-quarter shareholder letter. It expects to have offered greater than 85% of them by the tip of the present quarter, dropping about 4% a house on common.
In a letter to shareholders, the corporate mentioned it has taken steps to restrict its gross sales losses because it continues to shed its stock of single-family houses. That features paying much less for brand new houses, shopping for fewer of them and spending much less on advertising. It has additionally made deep cuts to itemizing costs to become old houses off its books.
“In hindsight, we didn’t do that rapidly or aggressively sufficient,” the corporate mentioned.
Greater than half the houses Opendoor offered from November by means of January had been for much less cash than what it had paid for them, in keeping with analysis agency YipitData’s evaluation of markets the place information is obtainable. These losses embody the service cost Opendoor collects from sellers, however might not embody the complete stability of different charges, YipitData mentioned.
The corporate mentioned in its letter that it expects extra constructive outcomes for homes it bought in latest months. For these houses, the corporate mentioned it was on monitor to hit contribution margins, a measure of earnings, of 4% to six% a house. The corporate ended 2022 with an unsold stock of 12,788 houses.
As its home-flipping enterprise sagged, the corporate final 12 months launched a market to attach residence patrons and homesellers, with out Opendoor having to behave as a purchaser.
“Constructing towards that managed market goes to be a multiyear journey,” wrote
Carrie Wheeler,
Opendoor’s chief govt.
Write to Will Parker at will.parker@wsj.com
Copyright ©2022 Dow Jones & Firm, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
