Key Points
The meme stock rally continued in Opendoor stock.
After opening up significantly higher, the stock faded in regular trading.
With the challenges in the housing market ongoing, the business still seems fundamentally weak.
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One day after soaring more than 30% on a meme-driven rally, shares of Opendoor Technologies (NASDAQ: OPEN) were up again, though this time there were signs that the rally, which seems to be a combination of a short squeeze and meme stock behavior, was starting to break.
As of 2:36 p.m. ET, Opendoor was up 8.4% on high-volume trading after gaining more than 30% earlier in the session.
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The Opendoor surge continues
Shares of Opendoor have now more than tripled in just a few weeks, seemingly after a post on Reddit‘s WallStreetBets page argued that the company could be the next Carvana, which has soared more than 10,000% since recovering from near-bankruptcy a few years ago.
As the stock has moved higher, trading volume has soared, and it was over 466 million as of 2:39 p.m. ET, a record for the stock. With just 729 million shares outstanding, that means more than 60% of shares have changed hands, and the session is not yet finished.
Opendoor may also be experiencing an ongoing short squeeze, as 24% of the stock was sold short as of a month ago, and short-sellers have likely moved to close their bets, given the surge in the stock. However, at the current trading volume, shorts shouldn’t have a problem covering.
What’s next for Opendoor
Opendoor stock surged in premarket trading and peaked in the regular session shortly after the market opened. From there, the stock gave up most of its gains, showing that the rally may have run its course.
The business case for a recovery in the stock seems thin at this point as the housing market continues to be sluggish, and interest rate cuts seem less likely after the latest inflation report. Still, meme traders seem to have taken hold of the stock, and it will likely continue to be volatile over the coming days.
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Jeremy Bowman has positions in Carvana. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
