To investors,
Retail investors just got a massive win last night. Their activism campaign to enact change at Opendoor ($OPEN) was completed with the naming of a new CEO and two new board members.
For context, Opendoor went public via a SPAC in December 2020. The company saw its stock price decline down to $0.51 per share earlier this year. The negative performance can be attributed to a confluence of factors, including a tough interest rate environment, a revolving door of talent, and a lack of interest from investors.
But a relatively unknown hedge fund manager, Eric Jackson of EMJ Capital, came out with a price target of $82 per share in July. Yes, you heard that right. Eric Jackson called for a nearly 160x appreciation in the stock over the next few years.
This sounded insane at first. How the hell could that be a real thing someone could predict? But then retail investors started looking into the company. That diligence made it obvious the company was significantly undervalued. They were trading at a market cap of a few hundred million dollars, yet the company was doing billions in revenue, had recently turned a profit, and was holding a ton of real estate on their balance sheet.
So retail investors started buying the stock.
But retail wasn’t just buying the stock. They began bombarding the company with pressure to improve the business. Within weeks, the existing CEO had stepped down. The remaining management team committed to not sell any of their stock. And the interim leader of Opendoor personally purchased equity in the stock market.
Not bad for a loose group of random investors who were individually acting in their own self-interest, right?
Most activist investors would have been satisfied to get this much done in such a short period of time. Retail investors weren’t satisfied there though.
The pressure continued. They wanted a new CEO who understood artificial intelligence. They wanted Opendoor co-founders Keith Rabois and Eric Wu back on the board of directors. And the retail investors were not going to rest until they got what they wanted.
Hundreds of tweets per day. Some nice, some not so nice. Just a relentless campaign to effect change at a business that these retail investors saw potential opportunity in.
Last night, the retail activism campaign became one of the most successful activism campaigns in recent history. Opendoor announced they have hired Kaz Nejatian, the COO of Shopify, to be the company’s next CEO. This is a very big win for Opendoor.
Kaz has been instrumental in building Shopify into one of the most disruptive technology companies in the world. He understands product, he understands technology, and he understands the importance of operating a lean, profitable business.
Opendoor also announced that Keith Rabois and Eric Wu would be re-joining the board of directors as well. Two more big wins. Keith and Eric are some of the world’s best entrepreneurs and investors. They bring the founder mentality and energy back to a company that desperately needs it.
So, to recap, retail activist have been able to effect significant change at Opendoor in approximately 60 days. They got the CEO to step down, they stopped management from dumping their stock, they helped find a killer new CEO, and they got their preferred directors into two of the board seats.
What an insane accomplishment in such a short period of time.
Again, this is probably the most successful activism campaign in recent history. It speaks volumes about the power of the retail movement. People can hate it. They can mock it. They can even try to fight it. But the retail investment crowd is a powerful force that is not going anywhere.
Financial markets have been changed forever. These individuals have real capital. They have access to information. And they are now emboldened to make their voice heard. We probably don’t fully understand the impact of this development, but it is important to keep watching.
Retail investors are going to become a larger part of the market. They are going to get better at what they are doing. Companies will have to come up with a retail investor strategy. If they don’t, the CEOs of these companies risk being the next executive under pressure from a group of investors who now have the track record of getting results.
Hope you all have a great day. I’ll talk to everyone tomorrow.
- Anthony Pompliano
Founder & CEO, Professional Capital Management
Bitcoin Destroyed The 60/40 Portfolio with Ric Edelman
Ric Edelman is the Founder of Digital Assets Council of Financial Professionals, and he is a New York Times #1 best seller of 13 different books.
In this conversation we talk about why financial advisors are finally getting excited about bitcoin, conversations they are having with their clients, the death of 60/40, gold, currency debasement, and why Ric has recommended having 10-40% exposure to bitcoin.
Enjoy!
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