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Rocket leads mortgage sector surge in GameStop-style short squeeze

Stock MarketsMar 03, 2021 07:20AM ET
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© Reuters. FILE PHOTO: FILE PHOTO: A banner celebrating Rocket Companies Inc. IPO is seen on the front facade of the NYSE in New York

(Reuters) - Shares in mortgage lenders UWM Holdings Corp and Rocket Companies jumped in early deals on Wednesday as the new targets of a short-squeeze gain popularity on internet message boards.

Rocket, parent of Quicken Loans, was up 6.2% at $44.12 in premarket trading, following Tuesday's 71.5% surge. UWM Holdings was trading 19.3% higher at $10.90.

The company, which struck a deal last year to go public via a SPAC deal, has also gained favor with retail traders online.

The latest gains have placed Rocket and some other mortgage lenders among stocks that have seen wild swings after becoming a focus of investors on sites such as Reddit's WallStreetBets, where mentions of the company have multiplied in recent days.

Message volume related to Rocket on trading-focused social media site Stocktwits more than doubled, data on Wednesday showed, with more than 94% of posts featuring positive sentiment toward the stock.

On Tuesday, Rocket's market capitalization rose by more than $34 billion to $82.6 billion. Its shares are currently heavily shorted, leaving them vulnerable to a short squeeze, where investors betting against a company's shares are forced to unwind their positions after a rally.

Investor appetite towards mortgage vendors this month is in stark contrast to their recent outlook towards the sector. A slew of canceled initial public offerings in recent months pointed to fears that the U.S. housing market may have reached a peak.

Shares of a few other companies in the sector also rose premarket, with those of residential mortgage platform provider LoanDepot trading 4.2% higher to $24.50, although in thin volumes.

Rocket leads mortgage sector surge in GameStop-style short squeeze
 

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