Opendoor’s Unprecedented Warrant Payout Targets Short Sellers

Opendoor Technologies Inc. has unleashed a groundbreaking warrant dividend strategy that sent its shares surging nearly 30% following the announcement, though profit-taking subsequently trimmed gains. The company's newly appointed CEO, Kaz Nejatian, is deliberately targeting short sellers with an approach never before seen in financial markets.

Since assuming leadership in September, Nejatian has been orchestrating a fundamental transformation of Opendoor, shifting its focus from a pure iBuying operation toward becoming what he describes as a "software and AI company." The warrant dividend represents his latest strategic maneuver in this repositioning effort.

Demonstrating confidence in his vision, Nejatian personally acquired $1 million worth of Opendoor stock on November 11. This vote of confidence comes after a turbulent year that saw the company's shares flirt with delisting before experiencing a revival through meme-stock driven rallies.

Unconventional Dividend Mechanics

The special dividend announced November 6 features a complex structure: shareholders will receive three distinct series of tradable warrants for every 30 common shares they own. These financial instruments will commence trading on Nasdaq starting November 21:

• Series K: $9 strike price
• Series A: $13 strike price
• Series Z: $17 strike price

All warrants share a common expiration date of November 20, 2026. The record date for eligibility falls on November 18 at 5:00 PM ET.

Should investors sell immediately? Or is it worth buying Opendoor?

The strategy's brilliance lies in its impact on short sellers, who must deliver these warrants to the institutions from whom they borrowed shares. With short interest exceeding 22% of outstanding shares, this creates a significant financial burden for bearish investors. Nejatian remarked with evident satisfaction, "It brings me some joy that this will ruin a few short sellers' nights."

Financial Performance and Market Reaction

Opendoor's third-quarter results presented a mixed picture. The company reported a loss of $0.12 per share, missing analyst expectations, while revenue of $915 million surpassed projections of $882 million.

The market response has been equally divided. Following an initial surge, shares retreated 6.72% to settle at $8.74. Wall Street analysts remain cautious, with Keefe, Bruyette & Woods and Citigroup maintaining negative ratings. In contrast, JPMorgan initiated coverage with an "Overweight" recommendation, expressing confidence in the new management team.

Path to Profitability

Management has set an ambitious target of reaching profitability by the end of 2026, banking on the company's AI technology and increased home purchasing activity. The critical dates to watch are November 18 for the record date and November 21 for the warrant distribution.

The coming days will reveal whether Opendoor's high-risk strategy can successfully pressure short sellers while positioning the company for its planned transformation. The warrant dividend represents both a tactical move against skeptics and a statement of intent from a leadership team determined to rewrite the company's narrative.