Rocket Companies Beats Earnings, Buys Redfin

Shares of Rocket Companies have rebounded off a recent 52-week low near $10 after announcing better-than-expected earnings. The company reported an incredible bounce-back quarter as revenue of $1.77 billion was 54% higher than forecasts for $1.15 billion.

In the previous quarter, revenue of $647 million missed expectations by 48% for a print of $1.25 billion. The profit of three cents a share was also a penny higher than forecasts.

Before the previous miss, Rocket had topped earnings estimates for seven-straight quarters. Expectations for the current quarter has the company earning a nickel a share on revenue just shy of $1.3 billion. These results will be reported in early May.

The stock was down 15% on Monday after the company announced plans to buy real estate brokerage firm Redfin for $1.75 billion. The deal is expected to close in the second or third quarter, pending shareholder approval.

Rocket believes the acquisition will help boost its mortgage business for home purchase mortgages. The deal values Redfin shares at $12.50 a share.

With the two companies merging, Rocket also announced it is restructuring its organizational and capital structure and reducing its classes of common stock to two, down from four.

The chart shows current resistance at $15 following the acquisition news. Continued closes above this level has gap up potential to $17 and resistance from late October. Support is at $13 followed by $12.50 and the 50-day moving average.

The previous earnings miss shows shares in a descending triangle with continued closes below $13 likely leading to a further fade towards $12-$10. The played out like spades with shares recovering their 50-day moving average before breaking out of another descending triangle.

Given the current and technical fundamentals, shares could be worth a look despite the strength off the January 13th low at $10.06. The September 24th, 2024 intraday high reached $21.38. There is a chance shares could make a run at $18 at some point this year if the company doesn’t have another hiccup quarter.