Opendoor's Q3'2023 Earnings Estimate & 7 reasons we think Q4 consensus is flat out wrong

Written by Tyler Okland
Here's our numbers and 7 reasons we think consensus is flat out wrong.
High level we expect small beats on revenue and adjusted gross margin relative to guide. That said, resale volume is at a low for the year and we expect the year to close at a similar level. It follows that Opendoor will guide for Q4 revenue lower than consensus ($1.15 B).
Consensus Q4 estimates of $1.15 B makes little sense in the following context: 
1.) Q4 seasonality -- generally a depreciating season, so no incentive to ramp resale here (the incentive is to ramp in Q1-2, when homes appreciate).
2.) Inventory build up -- can't ramp sales without first ramping acquisions. We expect acquisition ramp in Q4-Q1, hasn't happened in Q3.
3.) Highest mortgage rates in a generation causing...
4.) Transaction volume similar to the GFC. Tough landscape to grow volumes.
5.) Management's stated goal of $10 B revenue run rate in 2024 -- means incentive is actually to push all sales possible into 2024 to thread those goalposts.
6.) Opendoor historically guides for 10-20% lower rev than they actually post. So even if they were going to hit $1.15 B, the guide would be $150 million lower.
7.) The best data on the planet, our data, Datadoor, says $1.15 B is too high an estimate for Q4.
Remember following Q2 earnings $OPEN sold off because rev guide was far lower than consensus.
For those who understand the thesis, Q4 revenue is irrelevant (as was Q2-3), and should not move the stock. Here's all that matters:
1.) Acquisition ramp in Q4-Q1 at decent spreads
2.) Further structural improvements in making boring 1P transactions
3.) Growth in partnerships channels (low CAC) 

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