The iBuying business is ramping up, and the way we buy and sell houses could look very different in the future. That’s where recently public company Offerpad (NYSE:OPAD) comes in. In this Fool Live video clip, recorded on Sept. 16, Fool.com contributor Matt Frankel, CFP, discusses with colleague Brian Feroldi why he recently added shares of Offerpad to his portfolio.
Matt Frankel: Ticker symbol is OPAD recently went public through SPAC because it’s 2021. Why not. Year of the SPAC. This is the newest company to go public in the field of iBuying. If you’re not familiar, iBuying is a business model where a company will buy minor tweaks to it and then resell it hopefully at a profit. Now, I bought the stock about a week ago. I do not normally try to time the market, but I couldn’t have time this one much better. Let me show you this. This is the past week. Offerpad’s up 38% today alone, and up 64% over the past week.
Brian Feroldi: It’s up 50% today.
Frankel: Went up even more since I was talking about it, that’s big day today. The news today isn’t that big. The big news is that they got a new credit facilities, through JPMorgan Chase for $300 million. Buying homes cost money. It’s a big stretch to buy one house. Imagine if you’re trying to buy 6,000 in a year, like Offerpad is trying to do. You need to access the capital. They got about $300 million in the SPAC deal. That’s less than they had planned on getting, which means a lot of people redeemed their shares. They’re kicking themselves today for doing that.
Now, they have another $300 million to work on. They have about $300 million in cash on their balance sheet, and $300 million plus a $100 million accordion feature on that new credit line today. That’s why you’re seeing the market really reacted positively. To be fair, it’s going a little meme-stock-ish at this point in the past couple of days. There was a few days before I bought it, it rallied from $10-$16 and then down to $8 in one day. That’s pretty meme-stock-ish if you ask me.
But long-term, this is a really high potential business. The customers really love what they’re doing. I have a more aggressive view on iBuying than a lot of my colleagues do. I think within 20 years, this is going to be how we buy and sell houses in America, period. Full stop. It eliminates so many of the pain points from buying and selling homes. I don’t know if either of you have sold a home recently. It’s not fun. Even in a good real estate market, it is not fun. You have open houses, you have people coming and going inside your house. When I sold one house, the realtor wanted me to put half of our possessions in a storage unit to make a house look a little less full. There’s a lot of consumer pain points, engineered negotiations going back and forth, staging the house. I could go on. It’s not a fun process.
If iBuying can get it right, and that’s a big…