Here we go again. Meme stock traders, those fickle thrill-seekers of the market, have found a new love interest after ditching their summer fling with Opendoor Technologies (NASDAQ:OPEN). The spark was hedge fund manager Eric Jackson of EMJ Capital anointing Better Home & Finance Holding (NASDAQ:BETR) as “the Shopify of mortgages.”
Jackson’s declaration lit a fire under BETR stock, sending shares surging 47% on Monday and rallying another 33% higher in noontime trading today. It’s a classic pump: one quotable soundbite, and the herd stampedes.
Jackson, of course, is no stranger to this rodeo. Back in July, he ignited the meteoric rise in OPEN stock by dubbing it “the next Carvana,” ultimately triggering a 1,600% rally from sub-$1 lows to over $10 per share. Pithy associations, it seems, are all that’s needed to send meme traders into a frenzy — fundamentals be damned.
Unfortunately for OPEN, the honeymoon’s over. Those same traders are dumping OPEN shares en masse to chase BETR’s glow. Yesterday, OPEN tumbled 12%, and it’s down almost 8% this morning as the crowd rotates its bets. Even before this selloff, OPEN shares were starting to falter, hinting at the fleeting nature of hype-driven gains.
The Digital Mortgage Disruptor
At its core, Better Homes & Finance is a digitally native homeownership powerhouse, headquartered in New York City. Founded in 2014 by Vishal Garg after a frustrating home-buying experience, the company streamlines the $15 trillion U.S. mortgage industry through AI-powered tools.
It originates everything from conforming government-sponsored enterprise (GSE) loans — mortgages from Fannie Mae, Freddie Mac, and Ginnie Mae — to FHA, VA, and jumbo mortgages, selling them to banks, insurers, and REITs. Beyond lending, BETR bundles real estate agent matchmaking, title insurance, settlement services, and homeowners insurance — all online, no brokers required.
In 2024, revenue hit $108 million, up 50% year-over-year, thanks to tech efficiencies that slashed processing times and boosted inclusivity for underrepresented buyers. It was up another 37.5% in Q2. Better Homes is expanding into the U.K. and eyeing AI licensing deals, positioning itself as a one-stop homeownership platform.
Jackson’s Bold Bet
Jackson’s “Shopify of mortgages” tag evokes Shopify (NYSE:SHOP), the e-commerce giant that empowers merchants with seamless, scalable tools. He argues BETR is rebuilding mortgages from scratch with AI, much like Shopify democratized online stores.
Citing projections of $12 billion in revenue by 2028 via direct lending, institutional partnerships, and tech licensing, Jackson sees BETR as undervalued at 1x 2026 sales — versus 19x for rival Figure Technology (NYSE:FIGR).
EMJ Capital’s long position underscores his conviction: a potential 350-bagger in two years. It’s a seductive pitch for growth chasers eyeing AI’s mortgage makeover.
Cracks in the Comparison
But let’s pump the brakes on the hype. Shopify built a moat through network effects in a nascent e-commerce world. BETR is operating in a mature, regulated environment dominated by incumbents like Rocket Mortgage (NYSE:RKT) and JPMorgan Chase‘s (NYSE:JPM) Chase Mortgage.
Mortgages aren’t plug-and-play widgets — they’re tangled in bureaucracy, interest rate whims, and credit cycles. Jackson’s analogy glosses over this: Shopify’s 20%+ margins stem from low barriers, while BETR’s mortgage origination is capital-intensive and cyclical. Revenue growth is promising, but 2024’s $206 million net loss (down 62% from prior woes) still indicates a heavy cash burn.
With a $1 billion market cap post-surge, dilution risks loom if funding dries up. Closer scrutiny also reveals a post-SPAC relic that’s shed 99% from peaks, still haunted by Garg’s 2022’s mass layoffs via his infamous Zoom firings.
There are plenty of downside risks, too. Volatility is sky-high, and housing headwinds — like high rates even after the latest cut curbing refinances — could crush volumes. The stock’s low float amplifies meme-led squeezes, but stock reversals hit hard. GameStop (NYSE:GME) is still down 70% from its 2021 gamma squeeze highs.
Economic slowdowns or regulatory snags such as FHA scrutiny could spell trouble. Like OPEN before it, BETR investors will undoubtedly watch the stock tank once the buzz fades as hype is a sugar rush, not sustenance.
Key Takeaway
One analyst’s soundbite isn’t a buy signal — it’s clickbait. Even riding the coattails of investors like Warren Buffett demands due diligence because memes melt fast. As it stands, BETR is the flavor of the week, but next month, when another quotable pumps a fresh darling, expect the flock to bolt.
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