The Warrant Gambit: How Opendoor's New CEO Is Playing 4D Chess Against Short Sellers

When Kaz Nejatian took the helm at Opendoor Technologies (NASDAQ: OPEN) in September, few anticipated his opening move would be so audacious. On November 18, the company announced a warrant distribution scheme that would fundamentally reshape the stock’s dynamics – and perhaps, as some might say, ruffle more than a few feathers among those betting against the company. The choice of warrant series letters spelling out K-A-Z? Pure coincidence, one might quote with a knowing smile.

The Setup: A Stock Reborn

To understand the brilliance of Nejatian’s strategy, we need to rewind. For the first half of 2025, Opendoor had languished in obscurity – shares drifted from $1.60 in January down to a dismal $0.53 by June 30. Short sellers smelled blood in the water, particularly when the stock threatened to breach the $0.75 delisting threshold in May. The betting seemed straightforward: downward pressure, potential removal from NASDAQ, easy profits for the bears.

Then everything inverted. July brought meme stock status, triggering the kind of explosive volatility that transforms sleepy real estate tech companies into household names among retail traders. By August, the old regime crumbled when CEO Carrie Wheeler resigned. Enter Nejatian from Shopify’s executive suite in September, alongside the return of co-founders Eric Wu and Keith Rabois to the board. Q3 earnings in October came in modestly ahead of consensus – $915 million revenue versus $850 million expected – yet the numbers alone didn’t explain what was coming.

The Weapon: Three Warrants, One Name

Here’s where the CEO got creative. Shareholders holding at least 30 shares by November 18 would receive three tradable warrants per 30 shares: Series K, Series A, and Series Z, with strike prices of $9, $13, and $17 respectively, expiring November 2026.

The mechanics seem straightforward. A Series K warrant grants the right to purchase one share at $9. Today, with OPEN trading at $8.78, that warrant holds minimal intrinsic value – the market price undercuts the strike. But cross the $9 threshold, and suddenly those warrants become leverage devices. At $12/share, the K warrant is worth $3. At $15/share, it’s worth $6.

This tiered approach creates multiple trigger points for short-squeeze dynamics throughout the next 12 months.

Why Short Sellers Should Panic

The warrant distribution accomplishes what strategists call a “squeeze architecture.” By gifting long shareholders downstream call optionality, management incentivizes two behaviors: accumulation before the November 18 record date, and sustained buying pressure above $9 to maximize warrant value.

With roughly 25% of Opendoor’s float already sold short, this isn’t theoretical analysis. When short sellers face margin pressure at elevated price levels, they’re forced into two unpleasant choices: deposit additional capital into their brokerage accounts, or liquidate. Both paths are painful.

Adding another layer: warrants issued to shareholders create logistical complications for short sellers. Borrowed shares don’t generate warrant rights. Some shares are borrowed specifically for shorting, meaning the lender retains warrant privileges. Short sellers forced to handle this administrative burden – ensuring warrant delivery to the actual shareowners – may simply exit their positions.

The Long Game Questions

Yet for all the tactical cleverness, strategic questions linger. Opendoor remains fundamentally a real estate tech company navigating consumer affordability headwinds and inventory constraints. Spectacular stock mechanics can’t solve operational challenges. The 1,100% rally in six months already prices in enormous optimism.

Long-term investors might appreciate management’s willingness to engage in shareholder-friendly tactics, but should separate enthusiasm for the warrant structure from confidence in the underlying business. The market remains deeply divided on whether this company can sustain profitability and growth, or whether the meme stock dynamics will eventually deflate.

The warrant gambit is undoubtedly clever theater. Whether it constitutes sound capital allocation for shareholders remains the more consequential question.