Categories
FinTech Payments

Rocket Cos. Shares Rise 19 Pct On IPO Debut

August 07, 2020 at 01:10AM

It appears that billionaire Daniel Gilbert, the 58-year-old founder of Quicken Loans and Rocket Mortgage, made the right call when he trimmed the size of the company’s initial public offering (IPO) by more than $1 billion.

Shares of Rocket Cos. Inc. rose 19.5 percent to $21.51 following its debut on the New York Stock Exchange on Thursday (Aug. 6) 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 (Aug. 5), 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.

Rocket Cos. Shares Rise 19 Pct On IPO Debut …

Selected by Fintech Tube

press fctech Search Web: Rocket Cos. Shares Rise 19 Pct On IPO Debut

Leave a Reply