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Opendoor Overstated Price Algorithm Strength, Investors Say (1)

Nov. 23, 2022, 7:48 PMUpdated: Nov. 25, 2022, 3:05 PM

Opendoor Technologies Inc. portrayed its house pricing algorithm inaccurately in merger and public offering documents, inflating its stock price before the problem was brought to light, a pair of institutional investors say in a proposed class suit.

The algorithm couldn’t “accurately adjust to changing house prices across different market conditions and economic cycles,” increasing the risk for the company’s house-flipping business, the stockholders say. The investors—public employees’ benefit and retirement funds—filed their complaint Tuesday in the US District Court for the District of Arizona.

A September Bloomberg report brought to light data that showed Opendoor lost money on 42% of ...