Pretty soon, if everything works out as planned, Social Capital Hedosophia Holdings II (NYSE:IPOB) will have served its purpose and IPOB stock will cease to exist. However, this doesn’t mean that you shouldn’t own the stock. In fact, I’d consider it a strong buy right now.
You see, Social Capital Hedosophia is nothing more than a shell company. To roughly quote InvestorPlace contributor Josh Enomoto, the IPOB special purpose acquisition company (SPAC) is basically a “backdoor” way of bringing Opendoor to the trading community.
This leaves us with a number of important questions. What will happen when IPOB stock leaves the New York Stock Exchange? What is Opendoor’s business model? And why should we believe in its future?
Have no fear — I’ll answer these burning questions and more. So, if you’re ready, let’s jump into the specifics of IPOB stock.
A Closer Look at IPOB Stock
Assuming everything goes according to plan, IPOB stock’s final day of trading will be Dec. 18. But don’t worry — stockholders don’t need to sell their shares if they don’t want to.
That’s because the stock will trade under a brand-new ticker symbol on the very next trading day, which is Dec. 21. The symbol for Opendoor’s common stock will be OPEN and it will trade on the Nasdaq Exchange.
Again, no action will be required by existing shareholders. And thankfully, we might never have to read or say that long company name again.
But, taking one final look at the price action of IPOB stock, it’s safe to say that the bulls are firmly in control. On Dec. 14, the stock price moved up nearly 16% with no clear catalyst.
Plus, IPOB stock nearly doubled from the beginning of November to Dec. 14. Clearly, there’s excitement in the air and attempting to short-sell IPOB — or the soon-to-be OPEN stock — would likely be an act of self-destruction.
A Market Ready for Change
So, let’s talk about Opendoor and its business model. The company was founded in 2014 and it’s essentially a digital platform that clients can use to buy or sell homes.
In the era of the novel coronavirus, it’s not difficult to construct an argument for buying things online. But would people really be willing to buy a house online?
Apparently, yes. According to a survey conducted by Zillow (NASDAQ:Z, NASDAQ:ZG), 36% of Americans say that they’re more likely to try to buy a home entirely online during the pandemic. Plus, 30% said that, after the current outbreak ends, they would do the same. Finally, 43% of respondents said they’d be more likely to sell online during the outbreak and 33% said they’d consider selling online after Covid-19, too.
The Amazon of Real Estate?
Therefore, both during and after the pandemic, many people are ready to adapt their home buying and selling modalities. And, as Opendoor reports, residential real estate is the United States’ biggest undisrupted market, “with $1.6 trillion in annual home sales and less than one percent online penetration.”
In one article, InvestorPlace contributor Ian Bezek considers whether Opendoor could actually become the Amazon (NASDAQ:AMZN) of real estate. I tend to concur with his assertion: “unlike Amazon, Opendoor is not the first mover in this market,” competing against real estate companies like Zillow and Redfin (NASDAQ:RDFN).
Still, it’s perfectly okay if Opendoor doesn’t meet that lofty “Amazon of real estate” title. The company’s taking its slice of a massive $1.6 trillion pie. Even a small piece of that will be deliciously lucrative.
Bottom Line
The real estate market is changing and your investing strategy should change with it.
Already, IPOB stock has been on fire with bullish price action. And with its first day of trading on the Nasdaq just around the corner, OPEN stock could easily follow the same trajectory. It seems that home buyers and sellers could willingly make the digital transition — and investors could reap the rewards.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content -and crossed the occasional line -on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel’ Looking at the Markets.