Opendoor: Progressing Towards Positive ANI in 2027; Reit. OW & $8 PT

Research evidence excerpt

J P M O R G A N

North America Equity Research

10 August 2026

Opendoor

Progressing Towards Positive ANI in 2027; Reit. OW &

$8 PT

OPEN reported 2Q results that was lighter than expected, but we believe

fundamentals are improving with strong momentum towards the Adj. Net

Income (ANI) milestone. Revenue was $883M (+23% Q/Q), with contribution

profit of $51M (+59% Q/Q) and contribution margin of 5.8%—the highest in two

years and within the 5-7% target range. Homes purchased grew 77% Q/Q & 149%

Y/Y to 4,378, on just $5M of marketing (vs. ~$81M the last time OPEN topped

6,000 acquisition contracts). ANI was -$30M and Adj. EBITDA was modestly

below breakeven at -$4M. Importantly, we believe the quarter showed

momentum building toward mgmt’s ANI target by year-end. At current

volumes, margins & cost base, OPEN could reach ANI profitability on a 12

month go-forward basis into next year, no macro recovery required. We

model 2027 ANI of ~$1M, but we believe risk is skewed to the upside as

mortgage attach, faster turns, & AI-driven cost leverage scale. Several positive

signals underpin mgmt’s confidence: 1) contracts running 500+/week (~700

recently, ~5x Y/Y) in the weakest housing market in a generation & the worst

season; 2) true-seller conversion up sharply at the same spread levels (i.e., OPEN

is not buying acquisition growth); 3) aged inventory (120+ days) down to 9% from

51% three years ago; and 4) dramatic AI-driven operating leverage—HPMs

handling ~10 renovations now vs. 3 in 3Q last year, scaling to ~20 by year-end;

underwriters at 50+/day now vs. 20 in 3Q last year, targeting ~100 by year-end; and

ops expense/acquisition down to $3K from $8.4K Y/Y. Notably, mgmt expects to

compress the historical 2Q-to-3Q seasonal contribution margin drop (avg ~470500bps) to well below trend, guiding 3Q CM to ~4%-4.5% with contribution profit

dollars to more than double Y/Y, w/further improvement expected in 4Q. Overall,

we remain positive on OPEN’s value proposition, with renewed positive

momentum driven by product-focused execution. We reiterate our

Overweight rating, and we establish a December 2027 PT of $8 based on 20x

our 2028 Adj. EBITDA of $370M.

…