PHILADELPHIA, Oct. 26, 2022 /PRNewswire/ — Berger Montague advises investors that a securities fraud class action lawsuit has been filed against Opendoor Technologies Inc. (“Opendoor”) (NASDAQ: OPEN) on behalf of those who purchased Opendoor securities between December 21, 2020 and September 16, 2022, both dates inclusive (the “Class Period”).
Investor Deadline: Investors who purchased or acquired Opendoor securities during the Class Period may, no later than December 6, 2022, seek to be appointed as a lead plaintiff representative of the class. For additional information or to learn how to participate in this litigation, please contact Berger Montague: James Maro at [email protected] or (215) 875-3093, or Andrew Abramowitz at [email protected] or (215) 875-3015 or visit: https://investigations.bergermontague.com/opendoor-technologies-inc/
Opendoor was formerly known as Social Capital Hedosophia Holdings Corp. II (“SCH”) and operated as a special purpose acquisition company. On September 15, 2020, Opendoor, then still operating as SCH, and Legacy Opendoor, a private company operating as a digital platform for residential real estate, announced their entry into a definitive agreement for the Merger, which valued Legacy Opendoor at an enterprise value of $4.8 billion.
Following the Merger, Opendoor has operated a digital platform for buying and selling residential real estate in the U.S. Opendoor’s platform features a technology known as “iBuying,” which is an algorithm-based process that purportedly enables Opendoor to make accurate market-based offers to sellers for their homes, and then flip those homes to buyers for a profit.
On September 19, 2022, citing a review of industry data, Bloomberg reported that Opendoor appeared to have lost money on 42% of its transactions in August 2022 (as measured by the prices at which it bought and sold properties). Bloomberg further reported that the data was even worse in key markets such as Los Angeles, California, where Opendoor lost money on 55% of sales, and Phoenix, Arizona, where it lost money on 76% of sales. Worse, a global real estate tech strategist interviewed by Bloomberg, Mike DelPrete, predicted that, based on his analyses, September would likely be even worse for Opendoor than August. Bloomberg‘s findings evidenced the failure of Opendoor’s algorithm (“Algorithm”) to adjust accurately to changing market conditions.
Following this news, Opendoor’s stock price fell $0.50 per share, or 12.32%, over the following two trading sessions, to close at $3.56 per share on September 20, 2022—an 88.61% decline from Opendoor’s first post-Merger closing stock price of $31.25 per share on December 21, 2020.
The complaint alleges that, throughout the Class Period, the defendants made materially false and misleading statements regarding Opendoor’s business, operations, and prospects. Specifically, the Offering Documents and the defendants made false and/or misleading statements and/or failed to disclose that: (i) the Algorithm used by Opendoor to make offers for homes could not accurately adjust to changing house prices across different market conditions and economic cycles; (ii) as a result, Opendoor was at an increased risk of sustaining significant and repeated losses due to residential real estate pricing fluctuations; (iii) accordingly, the defendants overstated the purported benefits and competitive advantages of the Algorithm; and (iv) as a result, the Offering Documents and the defendants’ public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the Court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
Berger Montague, with offices in Philadelphia, Minneapolis, Washington, D.C., and San Diego, has been a pioneer in securities class action litigation since its founding in 1970. Berger Montague has represented individual and institutional investors for over five decades and serves as lead counsel in courts throughout the United States.
James Maro, Senior Counsel
Andrew Abramowitz, Senior Counsel
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SOURCE Berger Montague