Here’s why rocket companies’ stock rose today | The motley fool

What happened

Shares of Rocket company (NYSE: RKT) rose 71% to a new close of $ 41.60 on Tuesday.

So what

After ignition short clamps which helped raise the prices of companies like GameStop (NYSE: GME), AMC Entertainmentand Solar growers Earlier this year, Reddit’s traders seem to have found a new candidate.

More than 45% of Rocket Companies’ freely traded shares were sold shortly after the market closed on Monday, according to S3 Partners. That was apparently enough to attract members of the WallStreetBets Reddit group.

An upward sloping stock chart.

Rocket Company shareholders have made huge profits this week. Image source: Getty Images.

With its 9.4 million members, WallStreetBets has been trying to push the prices of some stocks up sharply, at least temporarily. As an example, the group is widely credited for helping drive a rally in GameStop that saw video game traders’ shares rise from $ 17.25 on January 4 to as high as $ 483 on January 28. February 19, before taking back over $ 100 in recent days.

Now it seems that WallStreetBet’s traders are once again coordinating their purchases in an attempt to drive up a share price – this time with Rocket Companies as their goal. After bullish mentions of Rocket increased on Reddit and other social media platforms this week, so do the stock’s trading volumes. The strong purchasing power has in turn contributed to a more than 100% rally in Rocket’s share price since 25 February.

Now then

What’s interesting about the latest move from Reddit’s traders is that – unlike GameStop and many of the other stocks they have targeted in the past – Rocket Companies actually has some solid business bases. The mortgage giant recently delivered strong results for the fourth quarter, including a 144% increase in revenue and a 277% increase in net profit. Rocket was so profitable that it even declared a special dividend of $ 1.11 per share.

So the bulls may have more justification for fighting the bears that are betting on the Rocket Companies than they have had in their previous short presses. Nevertheless, traders who buy Rocket shares at these increased prices take a lot of risks, as this latest trade attack can quickly erupt, like many of its predecessors.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We are motley! Questioning an investment dissertation – even one of our own – helps us all think critically about investments and make decisions that help us become smarter, happier and richer.