Recently, Opendoor Technologies (OPEN 1.03%) has become one of the top meme stocks, leading to big gains for investors over the past year. Relative to three years ago, the stock is also up substantially.

However, over the past five years, shares in iBuyer have experienced a high level of underperformance, losing considerable value. In contrast, the S&P 500 has nearly doubled during the same time frame.

Investors should keep this in mind before holding onto or entering a new position in this name. While still propped up by “meme mania” for now, other factors could soon send shares back toward prior lows.

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Opendoor versus the S&P 500

As seen in the table below, Opendoor’s investment returns relative to the S&P 500 appear extremely strong over a one-year and three-year time frame, but not so much over a five-year time frame.

Even if you have just a vague understanding of Opendoor’s historical price performance, you likely know the reason why this stock has experienced outsize gains in the past three years, but has severely lagged the market over the past five years.

Going public via a special purpose acquisition company (SPAC) merger in 2020, Opendoor shares initially surged. At the time, Opendoor was scaling up at a rapid clip, a trend expected at the time to carry on in the years ahead.

However, starting in 2021, the company and its shares experienced the double-whammy of a housing market slowdown, coupled with macroeconomic changes that led to a big retreat from speculative growth stocks. As a result, shares cratered from the mid-$30s to the low single digits per share.

This pullback carried on into 2023, 2024, and even into 2025, as a sluggish housing market led to continued revenue declines and heavy net losses for the company. However, thanks to the “meme mania” surrounding the stock starting last summer, shares have entered a new period of market outperformance.

Opendoor Technologies

Today’s Change

(-1.03%) $-0.08

Current Price

$7.70

Why this big comeback may prove fleeting

In short, while Opendoor’s meme stock rally has resulted in shares climbing past lows hit during recent years, the stock has yet to return to price levels last hit in the months following its stock market debut.

Meme-related bullishness has calmed down as of late, but many speculators still believe further upside may be in the cards. After all, with the stock’s high short interest, it may not take much to trigger another short squeeze. Then again, maybe not.

Sure, Opendoor’s management has touted that a just-completed distribution of tradable stock warrants to shareholders could help drive another short squeeze. However, as I recently argued, another recent corporate action could counter this squeeze potential: the redemption of convertible bonds in exchange for stock.

This has led to share dilution, which could put pressure on shares if the company’s financials don’t soon improve. Despite recent turnaround talk, sell-side analysts still expect Opendoor to report heavy losses in 2025 and 2026. Hence, while “meme mania” has enabled the stock to bounce back from recent lows, a reversal may be just around the corner.