stockman500

I tried scalping the PTON earnings today. I was not too hot, I was very sloppy after making money elsewhere today. I'm sitting at a loss after buying 1,000 shares at $68. I'm not in the habit of setting stops because I've regretted the times I've gotten stopped out on volatility. Pulled up the earnings and it does look like turd to my eyes. I'll try to get out premarket or early in tomorrows session.

Without a doubt at this point OPEN has the best IBuying pricing model. This can't be debated. If IBuying is feasible, OPEN will be the ones to do it. If not, maybe wait a few decades for a new company to try. IBuying is definitely solvable, it is just extremely difficult. Offerpad and RedFin are third rate and I don't see them out competing OpenDoor in IBuying if Zillow couldn't. The house pricing algorithms are mostly done with deep learning neural nets by training on huge data sets. Basically the same machine learning models used nowadays to solve any complex AI problem like training self driving or object and speech recognition or the TikTok recommendation engine. Essentially a black box of weighted nodes that's optimized by training on giant data sets and doing specific algorithmic fine-tuning. OPEN was founded in 2014, with the singular goal of solving the IBuying problem. That was the company wide, top down mission. They've spent the most years working on the problem: they collected a lot of data on houses and their features and experimented to see which features are important for pricing a house and which aren't and it all gets stored in their pricing models through data training, a very time consuming process. What's proprietary is the housing feature data they've collected and all the optimizations they've made and edge cases they've handled by tinkering with their pricing models. Even if key employees were poached by competitors, this pricing model is greater than them and is somewhat opaque and not intuitive and they won't be able to easily replicate it. Read this article https://www.opendoor.com/w/blog/understanding-how-busy-roads-affect-home-values to get a sense of how specific and detailed their solutions get: They estimate how loud traffic is for a home and use this information as a data point for pricing the home. OpenDoor started in only a few housing markets for many years perfecting their algorithms in a slow, gradual process and were careful to make sure it worked before scaling out, which is what they are doing now. They are scaling out massively now. Zillow comes into IBuying much later after seeing that OpenDoor is a giant threat and tries to do what OpenDoor does in order to compete. They set up an IBuying division and build IBuying algorithms and scale out in size in a much shorter time period than OpenDoor did and now they've gotten badly bit. Their models don't scale and are prone to massive mistakes. Even if they go back to tinkering with their algorithms in a few markets it will be too late, OpenDoor will have captured the whole market at that point. If IBuying works, and real estate agents get displaced, all their competitors get blown out of the water. From what I understand, Zillow profits mostly from real estate agent advertisements. It would be a shrinking market if more people start using an IBuying market maker over real estate agents.

I'm an OpenDoor Bull and this news feels very Bullish for OpenDoor. I've added heavily to my position. This feels like an inflection point, hopefully, and that I'm two quick steps in front of mister market. I'm slightly drunk and I'll briefly outline the bull case for OpenDoor without going into much depth. There are definitely a number of articles, forum posts online that talk in more detail about OpenDoor, so read them after this if you're interested. And I'm surprised OpenDoor isn't getting much attention and love on this forum. The thesis goes, IBuying is where the future is headed. It's this big disruptive technology that will replace real estate agents and take their profits. IBuying can also profit from all the additions that can be tacked on to the house buying and selling experience. If the IBuying company is fair at pricing houses and trusted and reliable and simple and fast, a good portion of the public will use them instead of listing with a real estate agent. By making houses more liquid people will also do more house buying and selling. OpenDoor is a pure IBuying play. Think Carvana for houses. They are the market leader, they have the most experience, they do the most in revenue, they have the highest margins. The Zillow angle was that Zillow has the brand name and popularity and the online house showing software platform OpenDoor doesn't have. The Zillow bull case then goes, they can get into IBuying without much difficulty by hiring the right people to implement IBuying and they'll out compete OpenDoor with the advantage of having their software house buying / selling platform that everyone uses. That's now been recently proven wrong! The pricing model is very important and technologically difficult. It's OpenDoor's moat. OpenDoor has been tweaking their IBuying machine learning algorithms and optimizing them since their founding and are best in class and now it appears that, with this news, they can't be replicated. It's like search for Google. With time, OpenDoor's pricing algorithms will get better and better, they'll make fewer mistakes, they'll squeeze out higher margins, they'll expand into more cities and suburbs. Their main competitor, 2nd largest IBuyer Zillow just admitted they can't compete, their algorithms aren't good, which makes OpenDoors moat all the more stronger, they won't be as stretched on margins, it will be a true Monopoly. Rich Barton has said in an interview years ago iBuying is "an existential threat because if it works and we don't do it, we get displaced as the marketplace". This feels like Zillow's capitulation.