🚀 Rocket Companies Stock Skyrockets: Here’s Why Traders Are FOMOing In

Wall Street's latest adrenaline rush comes from an unlikely source—mortgage giant Rocket Companies just went parabolic. Shares ripped higher as shorts got squeezed harder than a Boomer's HELOC.

The catalyst? Speculation that the Fed's next rate cut could reignite the housing market—because nothing says 'healthy economy' like betting on cheap debt to fuel another bubble.

Institutional shuffle: Whispers of a strategic pivot into blockchain-based mortgage tokens (because apparently everything must be on-chain now) added rocket fuel to the rally. Never mind that the 'partnership' was just a retweet from some anon account.

The street remains divided—bulls see this as the start of a new fintech revolution, while bears whisper 'dead cat bounce' over their triple-shot espressos. One thing's certain: when this volatility settles, someone's getting rekt.

Starting to gain some momentum

In the second quarter, Rocket reported adjusted diluted earnings per share of $0.04 on adjusted revenue of $1.34 billion, both of which came in ahead of Wall Street analyst estimates, and exceeded the high end of management's previous guidance.

Image source: Getty Images.

Management also provided encouraging third-quarter adjusted revenue guidance of $1.6 billion to $1.75 billion in revenue, ahead of analyst estimates coming into the quarter.

Rocket's CFO Brian Brown said on the company's second-quarter earnings call:

As we look ahead to the third quarter, we're cautiously optimistic about the summer homebuying season as the market continues to shift in favor of buyers. While we know that the homebuying season typically slows around Labor Day as kids return to school and families settle down, our current approval letter pipeline indicates that the summer homebuying season will be extended, with strong activity continuing through the third quarter.

A good play in a falling interest rate environment

As one of the largest mortgage originators in the U.S., Rocket WOULD benefit from interest rate cuts, and the chance of a rate cut in September increased significantly after weak labor market data this morning. Rocket has also done a good job of gaining more share of the historically fragmented mortgage market with its recent acquisitions ofand. As one of the largest mortgage servicing companies, Mr. Cooper Group will help shore up revenue in a rising interest rate environment.

Rocket trades at a very high forward earnings multiple of about 62x and a very low forward revenue multiple of less than 0.5x. I think investors can have some exposure to the company, as it should do well if rates fall and eventually bring down mortgage rates.