The WACC of Opendoor Technologies Inc (OPEN) is 10.5%.
| Range | Selected | |
| Cost of equity | 18.70% - 26.40% | 22.55% |
| Tax rate | 0.10% - 0.20% | 0.15% |
| Cost of debt | 7.00% - 9.70% | 8.35% |
| WACC | 8.8% - 12.2% | 10.5% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 3.23 | 3.85 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 18.70% | 26.40% |
| Tax rate | 0.10% | 0.20% |
| Debt/Equity ratio | 5.66 | 5.66 |
| Cost of debt | 7.00% | 9.70% |
| After-tax WACC | 8.8% | 12.2% |
| Selected WACC | 10.5% | |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for OPEN:
cost_of_equity (22.55%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (3.23) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.