With billions saved — and lost — Opendoor is living by the creed “go big or go home.” Yet even after a dreary Q4, the iBuyer persists, which may be the biggest takeaway, Mike DelPrete writes exclusively for Intel.
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Last week Opendoor posted its Q4 financial results, revealing mega losses alongside early signs of a possible turnaround.
Mike DelPrete
Why it matters: In 2022, Opendoor experienced an absolutely devastating test of its business model – a worst case scenario event – and survived.
Behind the numbers: Opendoor posted a net loss of $1.4 billion in 2022, on top of already sizable historical losses.
- Opendoor, and many other venture-funded disruptors, are burning billions of dollars to grow new business models – and the lack of profitability just doesn’t matter.
- The most noteworthy fact is that Opendoor lost $1.4 billion in 2022 and is still operating (albeit with a new CEO).
Cash is king: Manufactured financial metrics aside, Opendoor has plenty of (but not unlimited) cash reserves.
- Opendoor ended 2022 with $1.3 billion in cash, cash equivalents, and marketable securities – down from $2.2 billion at the beginning of the year.
- That’s a cash burn of $934 million – massive losses, but a scenario that Opendoor was able to weather without raising additional capital (or going bankrupt).
Like many companies, Opendoor is racing to cut its operating expenses as quickly as possible.
- In November, it laid off about 18 percent of staff, and just recently announced it had reduced its run-rate expenses by approximately $110 million.
- Operating expenses are trending significantly lower – a positive sign for a company looking to conserve cash (note: sales, marketing and operations flex up and down based on the number…