Trading in Rocket stock was halted multiple times on Tuesday.
Emily Elconin/Bloomberg
Rocket Companies shares rose as much as 75% on Tuesday as the mortgage originator became the latest heavily-shorted stock to squeeze short sellers.
Trading in Rocket (ticker: RKT) stock was halted three times for volatility on Tuesday. Shares closed at $41.60 for a gain of 71.2%. The company is one of the most shorted stocks on Wall Street, with 39.7% of float shorted.
The stock’s rise comes on the heels of Rocket’s fourth-quarter earnings beat last week. Rocket said it made $107 billion worth of new loans in the quarter, beating guidance that called for between $88 billion and $93 billion in originations. The mortgage company also declared a special dividend of $1.11 per share.
The company’s stock has been a popular topic on Twitter and Reddit’s WallStreetBets, the message board at the center of the GameStop frenzy, as of late.
“Rocket Mortgage-why was 38% of this company sold short?” tweeted Jim Cramer of CNBC’s Mad Money shortly after 2 p.m. on Tuesday. “It’s a really solid company, may not be your fave if rates soar, but it is so well run!”
Ihor Dusaniwsky, managing director of predictive analytics at S3 Analytics, compared Rocket’s price and short selling activity to recent trading in GameStop (GME), MarketWatch reported earlier Tuesday.
Rocket went public last summer in what was one of the largest IPOs of the year. At Monday’s close of $24.30, the stock had gained about 35% from its IPO price of $18. The early conversation among analysts revolved around whether Rocket, which originates home and auto loans using a direct-to-consumer digital platform, should be valued like a mortgage originator—a company sensitive to fluctuating mortgage rates—or a tech company with potential for growth.
As of Tuesday, the 14 analysts who cover Rocket stock have an average target price of $24.64, and an average rating of Hold, according to FactSet.
With the specter of higher mortgage rates looming—the average 30-year fixed-rate mortgage rose last week on the back of rising Treasury yields—Rocket management said demand remains strong in the housing market and rates are still low enough to warrant refinancing for millions.
“Rates will tick up and rates will tick down,” said Rocket Companies CEO Jay Farner on the company’s earnings call. “Our real focus is making sure we’re providing an experience that draws clients and consumers into our funnel and allows us to grow market share.”
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