A hedge fund manager’s public pitch for Opendoor Technologies has sparked a surge in the stock.
Wall Street thought struggling real estate e-commerce company Opendoor Technologies (OPEN 4.96%) was down and out. Suddenly, the stock has surged over 500% in less than a month.
What’s going on? A hedge fund manager recently announced an investment in the stock via social media, setting an $82 price target for shares that ignited interest in a company that has struggled in a slow housing market.
But is it wiser to chase the momentum, or to look to a proven e-commerce winner in Amazon (AMZN -0.33%) instead?
Let’s take a closer look at Opendoor’s prospects and determine which of these two hot growth stocks is the better buy right now.
Image source: Getty Images.
Is Opendoor Technologies poised for a comeback?
Opendoor Technologies aimed to become the housing market’s version of Amazon with iBuying, a process by which a company buys and resells homes through an online marketplace. The company went public via a special purpose acquisition company (SPAC) merger in late 2020, amid a period of 0% interest rates that ultimately led to high inflation and prompted the Federal Reserve to raise interest rates aggressively.
The resulting spike in mortgage rates (plus already higher home prices) slammed the brakes on the housing market, creating tremendous problems for Opendoor, which took significant losses on homes it struggled to sell for a profit. Opendoor’s stock has cratered since then as losses continue.
Hedge fund manager Eric Jackson elaborated in his post on X that he believes the company’s cost-cutting, pivot to partnering with agents, and lack of direct competitors offer a path to significant upside over the coming years, comparing it to the remarkable turnaround that Carvana achieved.
Over the last month, my X impressions have exploded talking about $BTQQF $IREN and $CIFR because everyone is looking for the next $CVNA.
We think we just found another.@EMJCapital has taken a position in $OPEN — and we believe it could be a 100-bagger over the next few years….
— Eric Jackson (@ericjackson) July 14, 2025
Eric Jackson acknowledges the risks associated with Opendoor stock, but setting such a high target for a company has spiked investor interest in the stock, sending it soaring.
Amazon offers far more certainty, though it’s probably not a 100-bagger anymore
Amazon, one of the world’s most prominent companies, is a safer stock to own. It doesn’t take a rocket scientist to figure that out. But Amazon’s massive $2.4 trillion market capitalization also means it has nowhere near the upside potential Opendoor does.
That said, the company still has room for growth. E-commerce accounts for less than a fifth of total retail spending in the United States, and Amazon’s lucrative cloud unit, Amazon Web Services (AWS), is poised to grow significantly over the coming decade and beyond as artificial intelligence (AI) drives increased cloud usage.
Analysts estimate Amazon will grow earnings by an average of 21% annually over the next three to five years. Assuming the stock’s valuation remains the same, that growth would double the stock price in just under four years. That’s no 100-bagger, but most investors would probably take those returns with a smile.
Sometimes, a bird in the hand is worth 100 in the bush
Comparing two very different e-commerce stocks boils down to this: The probability that Amazon doubles in value over the next three to five years is far greater than the probability that Opendoor increases by 100 times.
Opendoor’s core iBuying business is steadily dragging the company down, steadily depleting the company’s book value.
OPEN Tangible Book Value (Quarterly) data by YCharts
The iBuying process is a low-margin business model that ties up a significant amount of capital while unsold houses sit on the balance sheet.
Opendoor isn’t buying and reselling inventory fast enough, or fleshing out its iBuying model with enough higher-margin add-on services to make the company sustainable to this point. It could remain an uphill battle in a slow housing market plagued by affordability issues.
The idea of an Amazon-like e-commerce experience for real estate sounds good at first, but it hasn’t translated to business success. Until something changes here, Opendoor faces substantial risks that make it hard to justify buying the stock at a premium to its book value.
It’s like playing the lottery. Someone, somewhere, may win, but it’s a terrible way to try and make money.
I don’t know how high Opendoor may go. The market has become quite euphoric, which bodes well for speculative behavior. Opendoor announces earnings on Aug. 5. The company needs to deliver solid, or at least improving, business fundamentals; otherwise, the stock could easily reverse course rather quickly.
What I do know is that Amazon is the superior business and the better growth stock to buy right now. It’s not even close.
Great Job newsfeedback@fool.com (Justin Pope) & the Team @ The Motley Fool Source link for sharing this story.
