What Happened?
Shares of technology real estate company Offerpad (NYSE: OPAD) fell 5.5% in the afternoon session after reports revealed sluggish market conditions and elevated mortgage rates.
The stock's decline coincided with the release of data and commentary pointing to a challenging environment for the U.S. housing market. Reports indicated that high interest rates continued to weigh on demand and affordability. One report noted that 38% of home builders cut prices in July to attract buyers, the highest rate since 2022. This news created a difficult backdrop for iBuyers like Offerpad, which purchase homes directly from sellers with the intent to renovate and resell them. A slowing market with high financing costs can pressure the profitability of this business model.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Offerpad? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Offerpad’s shares are extremely volatile and have had 81 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 10 months ago when the stock gained 9.7% as stocks rallied after the Fed slashed its policy rate by 50bps (0.5%) to 4.75%-5.00%.
This marked the first rate cut since 2021, when the Federal Open Market Committee, led by Fed Chair Jerome Powell, began raising rates to tackle inflation. On delivering the outsized cut, the Fed acknowledged the improved conviction that inflation was moving sustainably toward its 2% target.
To round out its focus on fulfilling its mandate, the committee highlighted the commitment to supporting maximum employment amid slowing job gains.
Markets reacted with optimism following the announcement. The Russell 2000 index rose by 2%, suggesting the rebound was broader than just large tech and more pronounced in small-cap stocks. The major indices (Dow Jones, S&P 500) also touched new records. Overall, the announcement provided a breath of fresh air and a clearer view of the Fed's monetary policy stance, which the market had been waiting for with bated breath.
Offerpad is down 21.3% since the beginning of the year, and at $2.11 per share, it is trading 58.1% below its 52-week high of $5.04 from December 2024. Investors who bought $1,000 worth of Offerpad’s shares at the IPO in December 2020 would now be looking at an investment worth $13.82.
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