Quicken Loans parent company's stock skyrockets — CEO weighs in on rising rates

Brian Sozzi
·Executive Editor
3 min read
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Shares of Rocket Companies (RKT), the parent company of Quicken Loans, skyrocketed as much as 14% on Friday as a blowout fourth quarter on the back of red-hot demand in the U.S. for homes pummeled the short-sellers.

And despite the concerning rise in 10-year yields this month that has pressured the stock market — and perhaps could weigh on home buying momentum as it raises the cost of ownership — Rocket Companies CEO Jay Farner is staying not just bullish on 2021, but very bullish.

"We have seen a lot of great housing markets over the course of time, but look at January's numbers. I think January sales were the best they have been 20 years. So you have incredibly low rates, consumers focusing on how important the home is, low inventory — put all those things together and that's what we are experiencing," Farner told Yahoo Finance Live.

To Farner's point, last week the National Association of Realtors said existing home sales rose 0.6% to 6.69 million in January from a month earlier and increased 23.7% from one year ago. And the Commerce Department reported Wednesday that new home sales rose 4.3% to a seasonally adjusted annual rate of 923,000 units in January as people continued their migration to suburban living during the pandemic. December's sales pace was marked higher to 885,000 units from 842,000 previously.

How that homebuying momentum changes given the rise in 10-year yields in February is yet to be seen.

But, the momentum in home sales throughout 2020 led to an otherwise shocking fourth quarter from Rocket Companies. Closed loan origination volume surged 111% from a year ago. Net income exploded 350% year-over-year. The company announced a $1.11 a share special dividend, equaling to a $2.2 billion total payout.

Here's how the company performed vs. Wall Street forecasts.

  • Adjusted Net Sales: $4.78 billion vs. $3.96 billion

  • Diluted EPS: $1.14 vs. $0.88

Adjusted net sales was up 162% from a year ago. For the first quarter, Rocket sees closed loan volume up 90% to 99% year over year.

Oddly, Rocket shares continued to be heavily shorted into Thursday evening's earnings release. In spite of the company's bang up 2020, Yahoo Finance Premium data shows nearly 40% of Rocket's outstanding shares are sold short.

Farner is unfazed by the shorts.

"We are just going to keep doing what we do, focus on our platform, focus on great client experiences and I believe the rest will kind of take case of itself," Farner said.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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