Home Stock & Shares Rocket shares rise 19% on IPO debut

Rocket shares rise 19% on IPO debut

by Jonathan Adams
shares rise

The Detroit-based parent of Quicken Loans sold 100 million shares, to raise $1.8 billion, which valued the company at around $36 billion

Shares of Rocket Cos. Inc. rose 19.5 percent to $21.51 following its debut on the New York Stock Exchange on Thursday under the ticker “RKT,” after opening at $18.00 a share, the same as its IPO price.

If I can borrow a line from [Amazon CEO] Jeff Bezos, ‘We’re in a get-rich-slow scheme here,’ with 35 years in, Gilbert told CNBC’s Squawk Box. It’s the right move for our company at this time; we have thousands of people working for the company and they’re shareholders now, which is a great thing.

The company sold 100 million shares, down from the 150 million it had planned for the IPO, to raise $1.8 billion, which valued the company at around $36 billion.

On Wednesday, Rocket Cos., the Detroit-based parent of mortgage lending giant Quicken Loans, reduced its bid to go public to $2 billion.

Last month, Gilbert sought an IPO for $3.3 billion and offered 150 million shares for $20 to $22 each, seeking to raise about $2 billion, according to a filing with the Securities and Exchange Commission (SEC). That would have valued Rocket at $43.7 billion.

CEO Jay Farner batted away a question about bringing the cool reception to the higher valuation.

We are pretty excited about where we’re at here, and as you know, this is art more than a science, he told the network.

Rocket’s lukewarm reaction to its initial plan to go public suggests that the company failed to convince investors that its mortgage platform business deserved higher than a $3 billion valuation, similar to the ones distributed by tech companies in Silicon Valley, Reuters reported.

You’re seeing a low-rate environment in conjunction with decreased (mortgage) applications, Michael Underhill, chief investment officer for Capital Innovations, the Wisconsin-based firm that invests in IPOs, told Reuters. So, investors are being very cautious, very surgical, and if it’s not a rock-solid business model, they’re not really interested in buying at the IPO.

Still, at an IPO price of $18, Rocket ranks as the third-largest U.S. listing of 2020, excluding blank-check companies, Reuters reports. Only Royalty Pharma, the New York-based biopharmaceutical company, and the New York’s global record label conglomerate Warner Music Group, had bigger stock market debuts this year.

This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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