domainapple@gmail.com 00:01 Josh
Open door announcing a leadership change, a new CEO. It’s named a former Shopify executive to the post and the stock soaring. Joining us to discuss if this will spark more investor optimism. We got Derek Horstmeyer, Costello College of Business at George Mason University, Professor of Finance. Derek, uh, welcome. So the stock, it’s on the move, Derek, named, they named a new CEO.
00:32 Josh
They do reappoint co-founders of the board, including we should mention, I mean, there’s some heavyweights. Keith Raboy, that that that is a big name, but we know fundamentals challenged here, Derek, what do you make of it?
00:45 Derek Horstmeyer
Yeah, um I think uh this is a obviously a strong move for them. Uh investors hate uncertainty and there’s been some uncertainty hanging over this stock for a while now. Uh this move to uh appoint uh, you know, the former COO of uh Shopify is is a strong move. Um it aligns with kind of the move into AI, which he is an expert at and obviously the retail investors as as well as institutional investors are looking favorably upon this one.
01:21 Josh
There are challenges here, Derek. I mean just just to put a fine point on the numbers. Baron has a nice summary for us. The Open Doors never posted a net profit over a fiscal year. If you just look at the top line, revenue projected total looks like about 4 billion this year, that would be down from nearly 16 billion in 2022. I mean, can they pull this off? Do you think? How much confidence would you have that they could turn this around?
01:46 Derek Horstmeyer
Well, I think um, you know, it’s it’s a it’s a hard turnaround story, right? Uh this stock was on a tear, came absolutely down, um, you know, 80 plus percent. Uh, he has his work cut out for him, um, you know, but I think it is the correct move to try and incorporate AI and make a pivot um to to turn the story around. It might be a little bit cost-intensive, capital intensive, but you know, it probably is the right move for a stock that’s been suffering this much.
02:22 Josh
You know, let’s say Derek, I was one of your your students there and I said, you know, this open door store, I think it’s has something there. It’s compelling. I’m going to take a flyer on it, you know, what would you tell me?
02:38 Derek Horstmeyer
Um, well, I would be, I would still be hesitant. Uh, you know, we have seen the initial pop, you know, up uh, up quite a bit over the past few days. Um, but you know, there there’s a lot of headwinds. Uh so it’s almost, it’s a little bit like buying a lottery ticket, I think at this point. Um, you know, if if he can turn this around and get it upwards of a $20 or $30 or $40 stock again, I think that would be quite impressive. Um, but it there is some lottery-like uh returns here.
03:17 Josh
Does it tell us anything, Derek, the moves in this stock about the broader market? I mean, when you look at this, do you think it’s, do you think it’s fun? Do you think it’s concerning? What do you make of it?
03:36 Derek Horstmeyer
Yeah, I mean, I see I see the the re-emergence anytime we see a re-emergence of meme stocks, it’s it’s a little bit concerning, right? We’ve seen some really frothy IPOs recently. Uh we’ve seen an uptick in in meme stocks like Open Door in the retail retail space. uh this is all the chatter on Wall Street bets. Uh whenever we see this, it’s it’s um it is concerning, right? because we’re losing market efficiency. uh we’re we’re kind of losing the handle on what our fundamentals and even though this is good news for Open Door, right? it is a departure from fundamentals, I guess you would say.
04:15 Josh
Is this sort of this this is just a a new trend though, a new theme, Derek, for a host of different reasons that’s part of the modern modern market story though that we have, you know, in this case, um, you know, the so-called, I think they call themselves the Open Army, you know, it’s it’s a group of retail investors, they get together, they crowd together, they get open door on on the map, on the radar and they force, you know, meaningful changes at the sea suite for a host of different reasons, generational, technological, is this just going to be a continuing story we’re going to watch? If not open door, some other name.
05:02 Derek Horstmeyer
Yeah, um what meme stocks have shown us is if you get enough retail investors uh together and now they’re pairing with hedge funds. If you get if you get a few hedge fund uh well-known people and you know, a large retail army behind you, you can really move stocks. Uh you can you can go against the short positions and we’ve seen this, um we’ve seen this momentum hit stocks like Open Door, obviously GameStop was the original. Uh it plays out, you know, every few months and uh it’s an interesting new phenomenon in how how markets work.
05:43 Josh
All right, Derek, thank you so much for your time today. Appreciate it.
05:49 Derek Horstmeyer
Thank you, Josh.
