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Opendoor Technologies (NASDAQ:OPEN) is an iBuying business. Meanwhile, Zillow (NASDAQ:Z, NASDAQ:ZG) offers a tech-enhanced platform for buying or selling a home. Together, the two companies are effectively creating a super-app for real estate. This, along with a potential pause in interest-rate hikes, should catalyze OPEN stock in 2022’s second half.
Famously, or perhaps infamously, Zillow tried its hand at iBuying and failed. Opendoor hasn’t given up on this business model, though. Could a collab between Zillow and Opendoor offer a lucrative synergy, benefiting both companies and their stakeholders?
It’s a notable development with real-world real-estate implications. Concurrently, the U.S. Federal Reserve (whose interest rate raises weighed on real estate in the year’s first half) could soon give Opendoor’s shareholders a window of opportunity.
What’s Happening with OPEN Stock?
It’s probably not a coincidence that the Federal Reserve ramped up its interest rate hikes and OPEN stock also declined sharply during this time. As it turned out, the shares started the year at $15 but recently hit rock bottom at $4.30 before a slight recovery.
It’s still not too late to invest in Opendoor now, as there’s plenty of headroom and a revisit of $15 isn’t out of the question.
What could get OPEN stock back to its 52-week high? Just maybe, a Fed-led bounce-back in U.S. real estate could do the trick. July’s annualized consumer price index (CPI) growth of 8.5% came in below the experts’ forecast of 8.7%. Plus, it marked a decrease from June’s red-hot 9.1% CPI print.
Softening inflation means that the Federal Reserve may be ready to ease up on its interest-rate hikes soon. This could spur mortgage borrowing and lending activity.
The real estate market as a whole could greatly benefit from this possible outcome.
Opendoor’s Partnership with Zillow Is Bullish
The potential recovery of American real estate isn’t the only catalyst on the horizon for Opendoor. There’s also a multi-year collaboration with Zillow, which promises to combine the best of both businesses’ offerings.
As the press release explains, the Zillow-Opendoor partnership will “allow home sellers on the Zillow platform to seamlessly request an Opendoor offer to sell their home.” The result will effectively be an all-in-one super-app for today’s home sellers.
Zillow Chief Operating Officer Jeremy Wacksman clarified that the app’s users still will be able to sell on the open market with a Zillow Premier Agent partner. They also can easily get a cash offer from Opendoor.
To sum it up, the press release touts the arrangement as empowering “two category leaders to transform how people start their move.” It’s a perfect fit for both businesses and a cause for celebration among OPEN stockholders.
What You Can Do Now
Even though Opendoor had to deal with multiple interest-rate raises throughout 2022’s first half, cooling inflation could signal a Fed pivot to a more accommodative policy.
This, along with a potentially game-changing tie-in with Zillow, bodes well for Opendoor in the coming months.
Besides, OPEN stock has plenty of overhead room as it’s been to the $15 level and could get there again. So, don’t feel that you’ve missed out on the lion’s share of the gains.
An investment in Opendoor will, in all likelihood, continue to provide returns for open-minded real-estate stock traders.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.