Disclaimer, this is a half baked DD for why I think Amazon may either partner or acquire $OPEN Opendoor, which is a solid company in its own right (FWIW, I’m a shill on r/opendoortech). I fully expect opendoor to 🚀 irregardless of whether this partnership/acquisition does or doesn’t happen, but can only imagine how much it would pump if it were to receive the resources/visibility that would come with such a partnership.
- Amazon “the everything store” that doesn’t sell Real Estate (yet): In popular culture, it is known that Amazon has become the world’s largest online marketplace. It succeeds in taking a cut in a huge variety of product sales, but hasn’t yet begun tapping into the enormous, trillion dollar per year market of home buying (in U.S at-least). One obvious reason comes to mind, and there are likely dozens of others that I have not yet considered.
- Buying/Selling Real Estate is profoundly different than other product listings on Amazon: it goes without saying that the home buying process and its requirements are quite complex, in comparison to the purchasing decision flow for other products on the site (Find agent, repair and prep, open houses, financing, etc.), thus creating an online format for executing such a transaction, especially in a way that is easily digestible for users that are conditioned to enjoy niceties such as “buy in 1 click”, is a significant challenge.
- Opendoor cracking the online home buying format: buying and selling homes through opendoor removes a lot of the above friction. At a high level, you can sell your home to opendoor totally online, with flexible closing dates & video walkthroughs for required inspections to receive a cash offer, in short order. On the buy side, you can unlock homes you want to self tour (you don’t need someone to tell you that the kitchen you’re standing in is a kitchen), as well as taking care of finance and offer preparation/submission online, with all documentation in one convenient organized app/site. I encourage you to check this out for yourself, it is annoying to type this part out, as it is more comprehensively and elegantly covered in opendoor’s videos and website.
- Amazon begins forays into Real Estate via partnership with Realogy: from what I could find, it looks like Amazon had begun their own journey into the real estate market back in 2019. They had entered in a partnership where they referred home buyers/sellers to real estate agents (for a fee), but this basically doesn’t seem to capture nearly as much of the transaction value as it would if they were to take route of opendoor, which takes the place as middle man, commandeering a significant % of each transaction.
- ?. Anti-trust law, potentially non-prohibitive for acquisitions of companies in different industries: this one is an unknown and I’m not a lawyer 😵💫, but on initial scan, as much heat as Amazon gets in terms of anti trust law, the acquisition of a company in a completely different industry to gain expertise needed to compete in that new industry, seems more acceptable/fair game than say horizontal merging with another general online marketplace (say eBay, alibaba or wish).
Edit: I never suggested I had insider info, in my disclaimer, on first line I state that this is a “half baked DD on why I think Amazon will acquire opendoor”.
Positions: $OPEN shares and 2023 $40 calls (I have bought before their insane earnings call last week, and am pleased)
Sources: 1. https://investor.opendoor.com/static-files/e1f7c67c-8edf-4a90-a424-cf8c05a8787d