By Martin Baccardax

Opendoor Technologies is emerging as the market's latest so-called meme stock, a term used to describe GameStop and AMC Entertainment during the explosion of retail investor trading four years ago.

Shares of the San Francisco-based tech group that focuses on the stagnant real estate sector have nearly tripled in value over the past week. An influential investor's discussion of the company on social media appears to have triggered retail interest.

There's a reason that sounds familiar. GameStop, patient zero in the meme stock craze that began in January 2021, was a struggling stock with a dying business model and a string of quarterly losses. An investor who used the moniker Roaring Kitty and was later identified as former MassMutual advisor Keith Gill, advanced a bull case for GameStop stock on Reddit's WallStreetBets community that ultimately lifted the retail company's market value from around $1.2 billion to a peak of $22.7 billion in less than a month.

Profits for GameStop have been few and far between since. CEO Ryan Cohen has steered the company in several different directions since taking the helm in 2023. GameStop's market value is still north of $10 billion.

However, Opendoor may struggle to capture that sort of investor zeitgeist, even as its market value approaches $3.2 billion for the first time in more than a year following an endorsement from activist investor Eric Jackson, founder of EMJ Capital, over the past week on X.

Opendoor has been in steady decline ever since hitting a peak valuation of $20.6 billion in February 2021, shortly after its merger with the special purpose acquisition company Social Capital Hedosophia Holdings Corp II, led by Chamath Palihapitiya.

That isn't really a surprise, given Opendoor's focus on what's called the instant buyer market for home sellers, designed to speed up transactions and avoid realtor brokerage fees.

Existing-home sales have fallen by nearly 50% since the group went public in late 2020, and were last estimated by the National Association of Realtors at an annual rate of 4.03 million in May, the lowest since 2009.

High mortgage rates that discourage buyers are also locking sellers into their current homes. A Bankrate survey published last week showed more than half of U.S. homeowners wouldn't feel comfortable either buying or selling a new home, based on prevailing 30-year rates, which the Mortgage Bankers' Association pegs at 6.82%.

Executives at Opendoor weren't immediately available for comment when contacted by Barron's earlier Monday. The stock was 75% higher on Monday at $4.47, the highest since December 2023, with more than 1 billion shares changing hands.

Other investors are lining up to bet against Opendoor's recent surge.

Short sellers bet against a company by borrowing shares and selling them. If the price of the stock declines, the short sellers will buy back the shares at a lower price, return the borrowed stock (while paying a fee), and pocket the difference.

Wall Street pros argue that short sellers can help establish more accurate pricing and liquidity in stock markets. Critics say they can damage companies and wipe out small investors.

Data from S3 Partners, which tracks short selling across all the major U.S. indexes, suggest that bets against Opendoor have risen to around 24% of Opendoor's shares outstanding. Short interest on a stock such as Apple, by comparison, is around 0.75% of its shares outstanding.

Another factor, tied in part to elevated short interest in a particular stock, is the impact of a "gamma squeeze." A gamma squeeze differs from a short squeeze in that it is focused on the options markets. A traditional short squeeze occurs when stock lenders are forced to buy back shares that are moving quickly higher.

In a gamma squeeze, investors will often move to options markets to take advantage of a stock's sudden change in momentum.

Opendoor options are seeing a big uptick in buyers of call options, which give an investor the right, but not the obligation, to own shares at a certain price at some fixed point in the future.

Call option sellers, to hedge their risk while meeting market demand, will often buy shares of the underlying option at the same time. This can create a cycle of increased share prices that unwinds once the options expire.

Write to Martin Baccardax at martin.baccardax@barrons.com

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July 21, 2025 13:30 ET (17:30 GMT)

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