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Opendoor stock has jumped more than 1,000% in the last three months.
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Upstart has a number of similarities to Opendoor.
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The fintech company has proven its model can work even in a high-interest-rate environment.
Opendoor Technologies (NASDAQ: OPEN) dazzled investors over the last three months like few other stocks. The online home-flipper jumped an incredible 1,400% over the last three months, going from a little over $0.50 a share to more than $10 at one point.
The rally began with hedge-fund manager Eric Jackson making the case that the stock could be the next Carvana, which jumped to almost 100 times its original price after nearly going bankrupt in 2022. That argument gained steam online and helped turn Opendoor into a meme stock, as it initially surged on high volume and no news.
Since then, the stock gained on real news. That includes the prospect of the Federal Reserve lowering interest rates next week and later in the year, and the company's board overhauling its management team. In August, embattled CEO Carrie Wheeler stepped down; after hours on Wednesday, Opendoor named Shopify chief operating officer Kaz Nejatian as its new CEO, which sent the stock up 80% on Thursday.
Additionally, the company said that co-founders Keith Rabois and Eric Wu were rejoining the board of directors, and ventures associated with them were investing $40 million into Opendoor. It's easy to see how that news would inject enthusiasm into the stock, especially after it was on the verge of being delisted by the Nasdaq stock exchange earlier.
However, nothing's really changed for Opendoor as a business in the last three months. The company never reported a full-year profit, and the business is expected to shrink this quarter due to the weak housing market.
It's still a high risk with a questionable business model. If you're looking for a similar stock that can capitalize on falling interest rates, I think that Upstart Holdings (NASDAQ: UPST) is a better bet, and that it can outperform Opendoor over the next three years.
Upstart has a number of things in common with Opendoor. Both went public around the same time in 2020, and initially surged out of the gate before plunging in 2022 as interest rates rose and tech stocks crashed.
Upstart is a loan originator. It uses artificial intelligence (AI) technology to screen applicants, producing results it claims are significantly better than traditional FICO scores. Once it creates a loan, it typically sells it to one of its funding partners, so it doesn't keep the debt on its books.