Inflation ticks up. Should investors openoor be afraid? | Motley fool
Shares in recent months have increased by more than 300%, but the increasing level of inflation could report difficulties.
They continue to grow in the US economy.
Currently, since July 2025, the 12 -month inflation rate is 2.7%. The Metley Fool research monitors inflation as well as its historical impact on the stock market and consumers. Generally speaking, too much inflation is not a good thing.
One of the areas of economics where inflation may have an effect is the property. Opendoor Technologies (OPEN -11,33%) It seeks to revolutionize the housing industry using the business model of electronic trading, but fought the company. Should investors care for inflation ticking up and how could it about the opendoor and housing market?
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Opendoora’s matches’ root
OpenDoor is trying to create Amazon-A similar model of electronic trading for a housing industry where people can buy and sell homes online. The company buys houses, usually those that are in good condition, or those that Ongly needs minor repairs, and then sell them on their online market. It sounds like a great idea, but the company was able to turn it into a sustainable business.
The profit margins are slim. Opendoor must balance the competitions for homes that they buy with the need to sell these orders at a profitable price. Opendoor receives debt houses so that he can work on a large scale, but the debt arises.
The company’s aim is therefore a high stock turnover, to buy and sell houses quickly to expand the costs of their capital and business operations in as many transactions as possible. All this is even harder when you believe that market conditions and interests can change. A few years ago, the open interest rates caught up the opendoor outside the guard and did not believe the huge losses from the inventory he was holding on.
To say that kind, Opendoor Technologies has not yet gained a good investment. At the end of 2020, the company was published by SPAC mergers and shares dropped by more than 90% of its historical maximum.
What happens when inflation warms up and how could it affect the opendoor?
The housing market is slow now and it works against Opendoor.
The primary culprits are rats with high interest on mortgages. Rates for 30 -year -old mortgages are currently 6.5%. Higher res housing can be more expensive. For example, it assumes that you buy a $ 420,000 house using $ 5% and a conventional 30 -year mortgage. The difference in the monthly payment, which we died with a 5% rate of 7% of the rate, is over $ 500.
The federal reserve system (Fed) controls the rate of federal funds, a scale of the economy for which banks give each other. It not only records mortgage rates but affects them. If inflation continues, the Fed can re -read on low rats or even increase them to cool inflation.
It would be difficult to see how the housing market is released in this scenario, which always makes things more difficult for Opendoor.
Should investors take care of Opendoor or are shares by purchasing?
Opendoor Technologies recently released more than 500% after Hedge Fund manager published on social media shares. The sale then cooled some, but remains very volatile. The recent resignation of CEO Carrie Wheeler, who and the Anddedéd, contribute to the uncertainty that after the last report on the company’s earnings withdrawn from her position.
So where does it leave investors right now? For the one who, if inflation continues to be red, should be interested in Opendoor and its investors. Secondly, it would work against the opendoor if the Fed maintained a high federal fund. In addition, the fighting society is already missing the lead at the helm. Maybe the change will be a good thing, but it’s hard to give the opendoor the advantage of twice.
Despite the recent stock rally, it is probably best to avoid the openoor until the new CEO is introduced and the company shows at least two or three counseling district of improved business. For the time being, it is not clear where the Opendoor can keep his door for a long time.
Justin Pope has no position in any of these shares. Motley Beble has positions and recommends Amazon. Motley fool has a publication of politics.