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Rocket Companies: Great Growth Is History, While External Risks Remain

Apr. 11, 2021 8:35 PM ETRocket Companies, Inc. (RKT) StockLC, RDFN, UPST, Z, ZG15 Comments
Mercury Research profile picture
Mercury Research


  • Competition from both traditional and online banking platforms will rise.
  • Low cost of funds benefited lenders like Rocket, but rising rates are underway, which will also crimp loans growth.
  • Non-performing loans remain a concern.
  • The Goldilocks scenario was priced in, while forward revenue and earnings estimates are declining.
  • A redeeming feature is its cheap relative valuation.

Moving forward
Photo by CHBD/E+ via Getty Images


Rocket Companies is a financial services provider which has benefitted significantly from macro tailwinds given the Federal Reserve’s near zero interest rate regime. For the company to prosper, macroeconomic trends remain essential. Recently, the company has

This article was written by

Mercury Research profile picture
Mercury Research has tracked the financial markets through several cycles, with prior experience in multi-asset funds’ strategies. The core methods focus on extracting value through fundamental analysis, technical analysis and macro financial markets indicators. These skills are applied across multiple strategy styles and markets with absolute return targets. Formally trained PhD in economics and finance.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (15)

wonder how many bag holders from the spike on the week of mar1 are still holding?
@jeffk100 average 29....worst investment for the last 3 years
@cox87 26 here it does hurt
@clicea only a squeeze will help us out, sorry bro
it gets greater later
Long RKT.
Those counting on a share buyback should wonder why RKY went public in the first place. It was not so that Dan Gilbert could buy back what he wanted to sell in the first place.
Thank you for a balanced article. I’ll go back and check how RKT compares to those peers above in terms of forward p/e.
matttrakker profile picture
@itsgood careful RKT has first mover advantage and is expanding both in and outside of mortgages. Rkt trades at a premium to those other guys because Rkt is going to be something and those others are just going to be cyclical mortgage companies.
Bad article.

RKT = Rocket Companies Inc

RKT does more than mortgages, including Rocket Auto, which this author did not mention.

This was a hit piece against RKT, probably motivated by short interest.

I remain Long RKT!
OverTheHorizon profile picture
Housing super cycle only in 2nd inning fueled by rising employment, interest rates +/- 3% and 91 million millennial first time buyers. RKT will continue to grow online market share and add new lines and programs.
Did the hedge funds pay you to write this?
RKT will moon shot again on next earnings call when another round of dividends is announced and the announcement of the share buy back program taking effect. Rkt to 35-40$ very soon
MainelyMoney profile picture
@cashflow positive or another giant buyback authorized, or maybe they buy a FinTech company are two such as lending club or lending tree. Or all three.
@cashflow positive the short quote is much lower since last gamma squeeze. So i doubt it. It just moves on ER then back to trend channel of 22-24
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