Why Opendoor Technologies Stock Jumped Today

What happened

Shares of Opendoor Technologies (NASDAQ: OPEN) were popping again today as the home-flipping specialist was one of the main beneficiaries of this morning's cooler-than-expected inflation report.

As a result, the stock finished today's session up 9.9%.

So what

Opendoor is a real estate tech company whose primary business is flipping homes, i.e., selling them for more than it paid. That makes it particularly sensitive to interest rates and mortgage rates as home prices tend to fall when rates go up and rise as they go down.

This morning's consumer price index (CPI) report showed that year-over-year inflation rose just 3%, its slowest growth rate since March 2021, while core inflation, which excludes the volatile food and energy categories, rose 4.8%, its lowest level since October 2021.

Stocks rose broadly in response to the report, with the Nasdaq gaining more than 1% as the news makes it less likely that the Fed will continue raising interest rates.

Even better for Opendoor, the benchmark 10-year treasury yield fell 3% to 3.86%, which should help bring mortgage rates down as they're connected to treasury yields.

Now what

Opendoor stock plunged last year as mortgage rates spiked and home prices fell, but the stock now has the opportunity to take advantage of the opposite effect as other economic data shows the housing market beginning to recover and home prices now moving higher.

Competitors like Zillow and Redfin also shut their home-flipping businesses, potentially opening up more opportunities for Opendoor.

The stock has more than quadrupled this year as investors seem to be betting on a comeback.

Keep your eye on interest rates and housing market data as the stock should continue to move higher if the macrolevel data trends favorably.

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Jeremy Bowman has positions in Redfin. The Motley Fool has positions in and recommends Opendoor Technologies, Redfin, and Zillow Group. The Motley Fool recommends the following options: short August 2023 $14 calls on Redfin. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.