With its SPAC (special purpose acquisition company) merger now closed, Social Capital Hedosophia II is now Opendoor Technologies (NYSE:OPEN) stock. Shares have performed well since the deal announcement. But, things are just getting warmed up for OPEN stock.

Despite a brief hiccup earlier this year, this iBuyer will continue to disrupt the residential real estate space. Even at today’s prices, you can get in on the ground floor.

How is Opendoor disrupting this industry? As I wrote back in October, two key factors give it an edge.

Firstly, is its iBuyer business model. With lower fees than the traditional route, this alternative can result in greater proceeds for homeowners. But, don’t take that to mean the company loses out.

Since it’s buying properties from homeowners and reselling them, it’s collecting a spread on the transaction as well.

Secondly, using algorithms to provide instant quotes, it’s offering a higher level of convenience than a regular realtor could offer. Put it all together, and it’s no surprise this early-stage company has already scaled into a multibillion dollar business.

Yet, with its total addressable market topping $1.6 trillion, there’s plenty of runway ahead. The company itself estimates it can one day generate $50 billion in annual sales. Given this blockbuster growth potential, don’t split hairs over valuation. Now’s the time to enter a position. The tech disruption of residential real estate isn’t going anywhere. And this is one of the best ways to play this trend.

Long Runway Ahead for OPEN Stock

With the iBuyer business model, disruptors like Opendoor have a clear-cut edge against their “old school” competition. How so? For starters, iBuyers can beat traditional real estate agents on price.

As detailed on its website, selling through the platform can result in higher proceeds for homeowners than the traditional route. And not just from lower seller fees. Selling to an iBuyer eliminates the need to get your home in “show ready” condition. That is to say, no need for staging or repairs. Another factor is the lack of seller concessions. So is the fact that selling to an iBuyer minimizes overlap (paying for your old house while moving into your new house). Put it all together, and it’s clear why this model is a win for homeowners.

But can Opendoor make money with lower fees? Yes, because the real profit center for iBuyers is in reselling homes. Collecting a spread between the purchase and selling price, the company can profit while at the same time offering a value proposition for homeowners.

Yet, this isn’t the only edge. Convenience is another factor that’s in its favor. Offering a more seamless process than the traditional realtor route, the iBuyer stands to benefit as millennials and younger generations (who prefer online transactions) choose this route to buy their first homes.

Simply put, there are plenty of reasons why high growth will continue in the coming years. Sure, much of this potential is reflected in today’s valuation. Yet don’t let this make you miss out on this opportunity. For growth, you typically have to pay up. And this opportunity is well worth the price of admission.

Growth Potential Outweighs Valuation Concerns

Given what I said above, it’s no surprise Opendoor commands a rich valuation. Also, with SPAC impresario Chamath Palihapitiya the key player behind this deal, shares have moved higher, in anticipation of the successful tech investor striking gold yet again.

Valuation may be a concern. But don’t let it cloud your judgment. Sure, you have to pay up now. Yet, a few years down the road, today’s valuation (around $17 billion) may look reasonable in hindsight.

Why? As I mentioned above, the company has a clear pathway to reach $50 billion in sales. To get to this number, all Opendoor needs is to gain around 3% market share. With this in mind, its ambitious goal is more than attainable.

And, while some of its stock price today reflects this potential, don’t expect OPEN stock to hold steady from here and “grow into its valuation.” Shares have plenty more room to run as growth remains strong in the coming years.

Seize The Opportunity

Granted, it hasn’t been all blue skies for Opendoor this year. When the novel coronavirus first hit the U.S., disruption briefly impacted this disruptor. But, with this headwind turning into a tailwind, and as city dwellers shift to the suburbs, this company’s growth train remains on track.

Revenues are set to rise to $9.8 billion in 2023, the year it’s expected to become profitable. With trends on its side and a business model that gives an edge over the “old school” real estate business, it’s well on its way toward $50 billion in annual revenue.

So, what’s the play? With the SPAC deal now closed, now’s the time to buy OPEN stock.

— Matt McCall and the InvestorPlace Research Staff

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Source: Investor Place