Rocket posts $ 3.4 billion profit in first earnings report
Detroit-based Rocket Companies, the new publicly traded company that includes Dan Gilbert’s Quicken Loans, reported huge earnings on Wednesday in its first earnings report since going public last month.
Rocket reported net income of $ 3.46 billion in the second quarter ended June 30, compared to a net loss of $ 54 million in the same three-month period last year.
The company also made a record $ 72.3 billion in closed loans, up 126% from the same period in 2019.
Rocket shares closed at $ 31.30 on Wednesday, up about 2%.
Quicken Loans and other mortgage lenders saw increased activity during the COVID-19 pandemic, in large part because very low interest rates are driving borrowers to refinance their mortgages.
“Record interest rates and an improving US real estate market continue to drive demand for home loans,” CEO Jay Farner told Wall Street analysts. “In fact, we expect the third quarter to be one of our best cut-off volumes to date.”
Yet the majority of Quicken Loan’s mortgage business continues to be refinanced.
Rocket stock has been in tears since it debuted on August 6 at $ 18 a share on the New York Stock Exchange.
Its initial bid was below the company’s target price of $ 20- $ 22 because, according to a report in Bloomberg, investors believed it should be priced more like a consumer or financial company, not a tech company.
Rocket also announced on Wednesday that prior to the IPO it had distributed $ 2.26 billion to its parent company Rock Holdings. The IPO was equivalent to the sale of around 8% of the company.
Farner said Rocket’s goal is to achieve a 25% market share in the highly fragmented mortgage industry by 2030. Rocket had a market share of around 9% on the eve of its introduction. in stock exchange.
“It is definitely not a straight line for growth,” he said. “There are times in time when production can be flatter, but we are increasing our market share.”
About 98% of Rocket employees continue to work from home due to the coronavirus pandemic, Farner said.
He also told analysts that because Rocket’s business generally mirrors that of the real estate market, the company’s fourth-quarter profits tend to be lower than in the spring and summer.
Businesses under the Rocket Companies umbrella also include title company Amrock, home search platform Rocket Homes, personal loan provider Rocket Loans, call center Rock Connections, and a used car company. called Rocket Auto.