Rocket Companies, parent company of Quicken Loans, underwhelmed in its public debut on Thursday.
But executives remain optimistic with an eye toward the future, according to a HousingWire interview with COO Bob Walters.
On Wednesday, we reported that Rocket Companies had drastically lowered its pricing and shares being offered in its initial public offering – from an originally projected selling of 150 million shares at $20 to $22 per share to 100 million at $18 per share.
As such, the company was seeking to raise $1.8 billion in the offering, significantly less than the $3 billion to $3.3 billion it originally projected.
Shares trading on the NYSE under the symbol “RKT” climbed as high as $22.76 on Thursday, before closing up 19.5% at just under $21.51.
Part of the reason behind the company’s decision to lower its expectations, industry insiders say, is that Rocket was getting pushback on its claims that it is a true tech company, as opposed to being viewed more broadly as a mortgage lender.
According to Crain’s Detroit Business: The reduction came “as investors pushed back on the company’s valuation, believing it should be priced as a consumer or financial company rather than a technology business.”
When asked about the decision to go public at the bottom of Rocket’s pricing range, Walters told HousingWire that executives “certainly learned a lot about the process.”
“We were a bit of an enigma for public markets,” he said. “We are a 35-year company that is incredibly profitable with one of the five largest IPOs in the last five years.” Some of the startups going public these days are deeply unprofitable, including insurtech company Lemonade.
When asked if Rocket is attempting to digitize the entire home transaction, Walters answered by insisting that Rocket is “the only national brand in mortgage that is scaling a technology platform” in the way that it is doing.
“The real heavy lifting in our industry is handling the complexity of manufacturing a mortgage, especially when doing it at scale and conducting 100,000 closings a month as we are,” Walters said. “We are continuing to work on building out a platform based on those modern manufacturing principles.”
He also likened Rocket’s business model to that of e-commerce giant Amazon.
“Are they a tech company? They have warehouses and are transporting goods and linking it all together in the analog world digitally,” Walters said. “We’re thinking about it the same way. People are trying to wrap their brains around how the mortgage process is being transformed. The acceleration of change is speeding up every year…We’re working on linking it all together so that a client can have more visibility and take control of the transaction. And all the things we’re doing are being driven through technology. Everything we do is digital first.”
As for Rocket’s first-day stock performance, Walters said the company felt validated by the increase in price. But he’s also realistic about the roller coaster ride that being a publicly traded company can be.
“Being publicly traded is a marathon and we’re in this for the long haul,” he told HousingWire.
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