The WallStreetBets community appears to be at it again: Rocket Companies Inc (NYSE: RKT), a US online mortgage provider, has seen its stock soar by more than 70% on Tuesday, after it caught bullish interest despite not releasing any recent news.
Rocket Companies currently has a significant amount of short bets placed against it by hedge funds, which appear to have caught the attention of retail investors that are part of Reddit’s infamous WallStreetBets forum. According to FactSet, almost 40% of the mortgage company’s available shares were sold short, making it an easy target by meme-obsessed retail investors, who have collectively been on a mission to squeeze out short-sellers.
Rocket has only been public for a short period of time, but on Tuesday, the company’s stock increased by 71.19% and closed at $41.60 per share— marking the best day yet since its IPO in August 2020. However, despite Rocket’s sudden stock jump, it still remains unclear whether or not the heavily-shorted mortgage company will garner the same buying frenzy that GameStop did.
“We believe the trading reflects retail/Reddit activity like we’ve seen in other stocks recently,” said Wells Fargo analyst Donald Fandetti and later quoted by CNBC. “We noted our incrementally more positive view, but not good enough to support this move which is the third trading day after earnings. We expect the shares to normalize and again trade on fundamentals, however the timing is uncertain.” Nonetheless, the surge in Rocket signals that the meme stock-buying fuelled by WallStreetBets is likely far from subsiding, as retail investors continue to pile into heavily-shorted stocks in an effort to squeeze out hedge funds.
Information for this briefing was found via FactSet and CNBC. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
