Opendoor Appoints Former Shopify COO as CEO; Stock Surges

Opendoor, the online real estate platform experiencing a recent surge in retail investor interest, announced Wednesday the appointment of Kaz Nejatian, formerly a top executive at Shopify, as its new CEO. Simultaneously, co-founder Keith Rabois will assume the role of chairman.

The announcement triggered a 30% surge in Opendoor’s stock during extended trading, marking a significant rebound from its record low in June, with shares now trading at over fifteen times that level. This volatile journey reflects the complexities and potential risks inherent in the iBuying business model.

Rabois, a partner at Khosla Ventures, was instrumental in Opendoor’s inception in 2014, alongside Eric Wu, who served as the initial CEO before stepping down in 2023. Wu is set to rejoin the board as part of this leadership reorganization, signaling a potential return to the company’s founding vision.

These changes follow Carrie Wheeler’s resignation as Opendoor’s CEO last month, which occurred amid pressure from investors. Notably, Rabois and hedge fund manager Eric Jackson publicly criticized Wheeler’s leadership, advocating for a change at the helm. The leadership shuffle comes at a pivotal time for Opendoor, as it navigates a challenging real estate market and strives for sustained profitability.

Earlier this year, the company faced the prospect of being delisted from the Nasdaq due to its stock price falling below $1. However, Opendoor subsequently witnessed a surge in interest from retail investors, fueled by endorsements from figures like Jackson, earning it the “meme stock” label. This influx of retail investment highlights the growing influence of online communities in shaping market dynamics, but also underscores the potential for increased volatility.

Following the after-hours rally, Opendoor’s market capitalization now hovers around $6 billion, a substantial increase from under $400 million just three months ago. While this growth is impressive, analysts remain cautious, emphasizing the need for Opendoor to demonstrate consistent profitability and navigate the cyclical nature of the real estate market.

Nejatian brings a wealth of experience from his six-year tenure at Shopify, where he oversaw the product division and served as COO. His departure from Shopify is slated for Sept. 12, with his responsibilities being absorbed by the existing executive team, according to a company statement. Nejatian’s deep understanding of e-commerce and technology could prove valuable in optimizing Opendoor’s platform and streamlining its operations.

“Literally there was only one choice for the job: Kaz,” Rabois stated. “I am thrilled that he will be serving as CEO of Opendoor.” Rabois’ confidence reflects the strategic importance of this leadership change for Opendoor’s future trajectory. He also hints at Opendoor’s potential for further innovation and growth under Nejatian’s direction.

Opendoor entered the public market in 2020 through a special purpose acquisition company (SPAC). The company’s core business model involves leveraging technology to streamline the process of buying and selling homes, aiming to generate profits from the transactions. While the iBuying model offers convenience and speed, it also carries inherent risks related to accurately pricing homes and managing inventory during market fluctuations. The company’s performance is highly susceptible to interest rates, inflation, and broader macroeconomic trends. This makes achieving profitability and sustainable growth a challenging, but not insurmountable, task for Opendoor.