Shares in the iBuyer have traded for as little as $0.58 on the Nasdaq in recent days — well below the $1 threshold companies must meet to avoid delisting.
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IBuyer Opendoor on Friday announced that it is planning a reverse stock split — a measure designed to avoid getting kicked out of the Nasdaq for having a too-low share price.
The company announced the move in a statement and filing with the U.S. Securities and Exchange Commission, saying the board of directors is recommending the reverse stock split. Chief Financial Officer Selim Freiha said in the statement that the “proposal is intended to support long-term shareholder value and give us optionality in preserving our listing on Nasdaq.”
“We’re grateful for the continued support of our shareholders, and remain focused on building a durable, technology-driven platform that powers life’s progress, one move at a time,” Freiha added.
The statement notes that the split could range from between 1-for-10 shares to 1-for-50 shares, “with the exact ratio within such range to be determined by the board in its discretion.”
The move comes amid a challenging period for Opendoor that has seen its share price fall from a high of more than $34 in 2021 to a current price of just under $0.70 on the Nasdaq. Earlier this week, shares dipped below $0.60 — to $0.58. Higher mortgage rates, lower home sales, and minimal home appreciation — all trends that have been ongoing for several years now — have been particularly hard on iBuyers, which make money if they buy, renovate, and sell homes at a profit.
Companies are required to maintain a share price of at least $1 in order to remain listed on the Nasdaq. Opendoor shares were consistently trading below that threshold by early April, and the company received a warning from Nasdaq about the situation earlier this month. The warning gave Opendoor 180 days to get back into compliance — or in other words to raise its share price back above $1.
Opendoor shareholders now have to approve the reverse stock split. However, the company’s statement notes that even with shareholder approval, the board “will not effect the reverse stock split if the board does not deem it to be in the best interests of the Company and its stockholders.”
In pursuing a reverse stock split, Opendoor follows in the footsteps of its smaller iBuying rival Offerpad, which carried out a 1-for-15 reverse stock split in 2023. Offerpad shares had fallen below the $1 threshold in late 2022. And like Opendoor today, Offerpad back then opted for the reverse split to avoid getting booted from the market.
In Offerpad’s case, the move worked — for a while. Shares hovered between $8 and $10 for the final half of 2023 and into 2024, but have since been in a state of steady decline. As of Friday afternoon, they were trading for just over $1, though they have dipped below that threshold several times recently.
Offerpad had a market cap of just over $31 million as of Friday afternoon. Opendoor’s market cap was about $493 million.
In response to harder times, Opendoor has leaned into more asset light revenue streams, including a seller marketplace and a referral program for agents. Such moves helped Opendoor trim losses in Q1, though revenue was also down during the first three months of the year.
In its statement Friday, Opendoor ultimately said that the board’s decision to pursue the reverse stock split “will be based on a number of factors, including market conditions, the historical, then‑existing and expected trading price of our common stock,” and the “continued listing requirements of the Nasdaq Global Select Market.”
