Opendoor claims to have a superior way to price homes using artificial intelligence-driven pricing models. They look to make a healthy margin of four to six percent on home sales. It gives sellers cash for their homes, holds the home on its books, and then finds a buyer, and pockets the spread.

• In Q4, Opendoor sold even more homes than it acquired

• Opendoor doubled market footprint in 2021 to 44 markets,

• Now has a presence in 17 of the top 20 most populous cities in the US

Zillow abandoned the home iBuying business last year after suffering devastating losses. This was a massive competitor that is no longer in the running.

$OPEN is a polarizing stock. It's easy to see how rising interest rates might have encouraged home buyers to rush to buy houses from Opendoor in advance of rising rates (which could explain why $OPEN sold more homes than it acquired this quarter).

Counter-balancing forces:

• Inventory is as low as it’s ever been

• Purchase mortgage applications are higher than they’ve been for the last decade (except for 2021)

• Opendoor is a tiny part of the market, and has a ton of room to grow.

Bottom line: The real estate industry has been a holdout from digital transformation innovation. Is this because it will never change, or has just been slower to change? I think the secular trend of services moving from offline to online will be one that come to the real estate industry eventually as well.

It's still very early in this story. Potentially too early. As a taste, I already 'caught a falling knife' on my entry today.

To learn more, check out this discussion with Tyler Okland about Opendoor: