Thread by @DPogrebinsky

Been doing a lot of thinking & honestly think $rkt could potentially be lining up for a mini $gme type moment:

1) $rkt tried to go public at 150M shares @ $20-22 however due to weak demand cut back to 100M shares @ $18. This also means pre lockup the float was just 100M or $2B

2) ive been monitoring short interest and ever since last q its gone up 5% every two weeks like clockwork with the latest info now showing 37% of shares held short. This is off the 100M ipo float not the total.

3) last q they announced a $1B buyback...now let that sink in, less than 3 months after going ipo they are buying back $1B out of the $2B total of shares they issued to go public at 18, when has anyone ever seen that happen ever?!

4) total outstanding shares is close to 2B so where are the other 1.9B? Well this he founder Dan Gilbert (cavs owner) owns about 75% of all shares in the company! Whats more is he participated in the ipo and bought over $13M of additional stock at $18!

5) for company thats been around 25 yrs & didnt need $ the reason $rkt went ipo was to provide liquidity to insiders who own 95% of all shares (Gilbert alone owns 75%) so the lockup was a huge worry & i believe is why shares been rangebound since ipo, but lockup expired yday!

6) i predicted no insider & especially Gilbert would sell any shares at $21 as its still barely in the range of their initial ipo price and just $3 more than where he bought additional shares and so far i have not seen any additional shares sold &doubt there will be much if any

7) $rkt is keenly aware of the short interest in their stock. The ceo mentioned it in an interview with cramer after the last w and once again last fri when he did an interview on cnbc ore market where he said “this is not a stock you want to be short in”

8) never underestimate the bruised ego of a billionaire who feels insulted. Gilbert & his company are getting no respect from the ipo nor now with the heavy short interest that keeps increasing and weighing the stock down to the point where ceo is making public comments about it

9) whats best way to get back at shorts? buying back half the float & not selling ur shares is a great way. So here we come to the $gme moment. What if this q $rkt announces they spent full $1B buyback already + announce another? That 37% short interest unexpectedly becomes 75%

10) $rh did this twice when they felt pressured by shorts so while not the most likely outcome its still possible. More likely they will say we spent 300M or whatever it is but with another huge q they can easily announce adding more to their buyback or a dividend

11) none of the above even includes fundamentals on stock which unlike $gme are great. $rkt trades 12PE on 2021 eps expectations which by the way are 50% lower than what they earned in 2020. Yes i get the peak low rates argument & yes earnings will fall but by 50%? I doubt that

12) $rkt still announcing new partnerships which they said last q they’ll announce a large exciting new one this q & have plans to triple market share in US from current 8% to 25% by 2030. They also do auto loans and expanded to canada. In 2020 they’ll make $8B off of 14B revs!

13) bear arguments:
A) rates will rise from here & refinances will plummet: $rkt said on last call that 50% of all refinances are not rate dependent (ppl take cash out) and that there are trillions in refinances to keep them busy for years

B) if housing crashes $rkt is on the hook for bad loans or wont br able@to sell them: 9 months into 2020 $rkt held loans on their books for an average of 18 days (i contacted IR). Also they sell 98% of loans to govt who is a forced buyer (fannie/freddie), & only 2% to 3rd parties

C) 20 was peak earnings & they’ll fall in 21: analyst estimates already call for 50% drop in eps this yr which i think is too much. If gain on sale margins fall less + $rkt is able to gain market share then what happens to stock if eps drops 20-30%? I think stock doubles

14) the above fundamentals dont even count on a short squeeze happening, stock could double all on its own without any shorts covering, now layer a short covering on top too and things can really overshoot

15) while anectodal i spoke with a buddy who knows many ppl working at $rkt and said they’re all absolutely crushing it right now and hiring a ton. Plus they have two new commercials during the super bowl this yr

16) all the above doesnt even take into account their unique digital platform that has 90%+ retention, uses AI for leads & was able to scale 2x the mortgage volume during the pandemic. The leverage in the model is insane as they have 65% net income margin!!

17) ill admit this stock has been the bane of my existence as i cant stay away from the value and all its done is F me in return but i see it as a compelling play into earnings on 2/25 and will be adding big tmrw and daring this stock to F me again