Shares rose as much as 75% on Tuesday, as the mortgage originator became the latest heavily short stock to squeeze sellers short.
Rocket stock trading (ticker: RKT) was halted three times for volatility on Tuesday. The shares closed at $ 41.60 with a gain of 71.2%. The company is one of the shortest stocks on Wall Street, with 39.7% of the float short.
The stock’s surge comes on the heels of Rocket’s fourth-quarter earnings last week. Rocket said it got $ 107 billion in new loans in the quarter, beating the guidance that required between $ 88 billion and $ 93 billion in origination. The mortgage company also declared a special dividend of $ 1.11 per share.
Shares of the company have been a popular topic in
and Reddit’s WallStreetBets, the message board at the center of the GameStop frenzy, lately.
“Rocket Mortgage: Why Did 38% of This Company Go Short?” tweeted Jim Cramer by CNBC Bad money shortly after 2pm on Tuesday. “It is a really strong company, it may not be your favorite if the rates skyrocket, but it is very well managed!”
Ihor Dusaniwsky, Managing Director of Predictive Analytics at S3 Analytics, compared Rocket’s price and short selling activity to recent transactions in
(GME), MarketWatch reported early Tuesday.
Rocket went public last summer in what was one of the biggest IPOs of the year. As of Monday’s close of $ 24.30, the stock had gained roughly 35% from its $ 18 IPO price. The initial conversation among analysts revolved around whether Rocket, which originates home and auto loans using a digital platform. direct to consumer, you should see yourself as a mortgage originator, a company sensitive to fluctuations in mortgage rates, or a technology company with growth potential. .
As of Tuesday, the 14 analysts covering Rocket shares have an average price target of $ 24.64 and an average rating of Hold, according to FactSet.
With the spectrum of higher mortgage rates looming (the average 30-year fixed-rate mortgage rose last week due to rising Treasury yields), Rocket’s management said demand remains strong in the housing market and rates are still low enough to justify refinancing millions. .
“Rates will go up and rates will go down,” Rocket Companies CEO Jay Farner said on the company’s earnings call. “Our real focus is making sure we are delivering an experience that draws customers and consumers into our funnel and allows us to increase market share.”
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