The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the logo on a smartphone arranged in Hastings-On-Hudson, New York, U.S., on Friday, Jan. 29, 2021.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Shares of Rocket Companies rallied more than 20% Tuesday in a surprising move on no apparent new news. The online mortgage provider currently has large short bets placed against it by hedge funds and appears to have garnered some bullish interest from day traders on Reddit’s infamous WallStreetBets.
Nearly 40% of its available shares are sold short and it is near the top of the list of U.S. companies in terms of size of short bet by hedge funds, according to FactSet. That makes it classic target by meme-obsessed investors, who have been storming together this year into shares and call options of heavily shorted companies in order to squeeze out short sellers. It was unclear of the size of the retail interest in Rocket at this time.
A number of popular posts on WallStreetBet chatroom featured Rocket on Tuesday. One says “I like RKT. $1.7M all-in, let’s gooo YOLO,” and it quickly drew more than 1,700 comments.
“It’s 38% short … When people see that, they think you can bust the sellers,” CNBC’s Jim Cramer said on “Squawk on the Street,” while adding he actually likes Rocket Companies’ management and business fundamentals.
“I have been a huge fan of [CEO] Jay Farner and [Chairman] Dan Gilbert .. and frankly don’t understand why the stock did not react to what was a very good where they basically laid out a story that just said, ‘We can show how when rates go up, it has not hurt our business. When rates go down, it’s not hurt our business.”
The surge in Rocket could be a sign that the retail trading mania seen in GameStop earlier this year is still a factor. A month ago, an army of retail investors on Reddit managed to push the brick-and-mortar video game retailer up 1,500% in two weeks, inflicting huge pain for short selling hedge funds. The broader market also experienced some spill-over impact from the frenzy as many big investors took down risk across the board.
— CNBC’s Kevin Stankiewicz contributed reporting.
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