BUZZ-Opendoor Technologies falls after $650 mln convertible debt sale

With about 971.1 million shares outstanding, the company has roughly a $3 billion market cap.

On Aug. 4, Opendoor reported second-quarter revenue rose 23% from Q1 to $883 million, missing analysts' estimate, and said it expects positive adjusted net income on a 12-month go-forward basis by the end of 2026.

At Wednesday's close, the stock was down 40% year to date. The average rating of 10 analysts is "hold"; median price target is $4.38.

Shares of online residential real estate firm Opendoor Technologies fell 8% to $3.21 before the bell on Thursday after the capital raise news.

Tempe, Arizona-based Opendoor announced it sold privately to certain investors $650 million of 0% convertible bonds due Aug. 15, 2030.

The conversion price of $4.71 represents a 35% premium over the stock's last sale of $3.49 on Wednesday.

The company said it intends to use about $52.5 million of the net proceeds to fund the cost of capped call transactions to reduce any potential dilution and about $158 million to repurchase about 45.3 million of its shares; the remainder will be used to expand its home inventory and market footprint.

The company said above the cap price of $6.98, the shares repurchased are expected to offset net share issuance until the stock price exceeds $10.38.

In addition, J. Wood Capital Advisors, the placement agent for the transactions, intends to purchase $25 million worth of Opendoor's shares.