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Open Thoughts On OPENDOOR 
$OPEN has Gross Margins of 7% and makes around 2 to 3% per home sold
Can be compared to $VRM and $CVNA business model of low margins (10%) but high volumes
But does VALUATION makes senses
The Good Side 
$OPEN and $CVNA are providing a better UX, a platform consumers can trust and convenience Data on the auto and housing market is relatively easier to find, enabling these to compete They both address HUGE markets that have not been digitised yet
The Bad Side 
The housing & auto market face large difficulties during downturns Auto dealers have to limit their inventory during the downturn BUT need sufficient stocks for the recovery
iBuyers (as $OPEN) have to pause buying and sell current inventory at loss
The Bottom Line 
Both $OPEN and $CVNA are active in a large market that needs digitisation Both are in hyper-growth (pre-COVID) and try to improve their unit economics
In the long run, $OPEN plans to drive its contribution margin to 7%, up from 2 - 3% today
Tricky Valuation $OPEN is worth $ 12.3B on 2020 (run rate) sales of $ 5B
Despite Opendoor’s attractive story, the long term potential and valuation don’t make perfectly sense
We can view $OPEN ’s sales as “Gross Sales” and its Gross Profit as “Net Revenue”
Similar to $UBER and other commission-based businesses $UBER generated $ 14.8B in Gross Bookings and $3.1B in Net Revenue Can be approximated to $ 12B in Full Year Net Revenue With a market cap of $ 90B, it currently has a Price To Net Revenue of around 7.5
$OPEN could generate $ 5B in sales this year and has Gross Margins (i.e. +/- commission) of around 7% so it could get $ 350m in Net Revenue At today’s market cap of $ 12.3B, this mean that its Price To Net Revenue is at around 35
If sales double to $ 10B and GM increase to 10% this would translate into $ 1B in Net Revenue At a multiple of 12, this would give a market cap of $12B, almost today's valuation We sold our small speculative stake in $OPENWant to dive deeper? https://www.bloomberg.com/opinion/articles/2020-10-14/opendoor-is-a-13-5-billion-spac-sensation-that-will-buy-your-house
