I'm sure some of you guys have read the fantastic DD by /u/The\_Big\_Short\_2020
If you haven't already, you should read it.
Linked here: https://www.reddit.com/r/wallstreetbets/comments/lr35wt/rkt\_dd\_part\_iii\_but\_rkt\_is\_just\_a\_mortgage\_company/
Now we're here. Rocket Companies absolutely crushed Q4 earnings and has absolutely mega bull guidance. Remember, the PE for Rocket is ridiculously low considering the current market (ITS UNDER 5, whereas other mortgage companies are trading around 15). Zillow, which is pretty much a glorified home selling marketplace, isn't even profitable has a near identical valuation, and before RKT got the earnings boost, valued at MORE than 🚀🚀🚀, which is just laughable, considering RKT is a lot more than just a mortgage company (which is detailed in the linked DD).
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Here's another little DD summary I found:
https://docs.google.com/document/d/1XAbx\_2fOHNMy2MvLW3CFEhJDRUJGr69coTVSV3A6ip4/edit
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If you were too lazy to read either of those, know that RKT has 40% short interest. 40 PERCENT. THE SHORT BORROWING FEE IS 80%
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This is where we talk about the upwards pressure on RKT stock that is coming this next week. With the Q4 earnings release, RKT issued a special dividend of $1.1 per share. This means that shorts have to either cover or pay the dividend by Friday, as the dividend is paid out to the owners of the shares at market close 3/9. Since the market operates at T + 2 day settlement, shorts have to cover by this FRIDAY or pay $40 mil+ to cover the dividend.
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YES. YOU READ THAT RIGHT. 🚨🚨 5 DAYS UNTIL THEY HAVE TO COVER OR COUGH UP THE DIVIDEND
🚨🚨 THIS IS NOT A DRILL. WE HAVE AN ACTUAL SHORT EXPIRATION DATE 🚨🚨
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To add to the heat, RKT announced 1B in buyback of their only 2B float in december. It appears they have not done it yet, as they have been waiting to release news that they announced last night in their ER. Thus, it is possible they will begin the buyback this week, which kills two birds with one stone, as a buyback will reduce the special dividend they have to pay out and put a ton of upwards pressure on the stock.
This special dividend is not just because the company is doing amazing, it's also targeting the 40% short interest in the stock. As a reminder, Dan Gilbert (founder) and Jay Farner (ceo) are highly aware of the short interest in RKT. Jay even talked about it this morning, and Dan alone owns 80% of shares.
I'd link the interview, but reddit won't let me for a DD post.
TLDR: \~110M SHARES OUTSTANDING, 40% SHORT INTEREST, EVERY SHORT HAS TO PAY $1.1 PER SHARE SHORTED OR COVER BY 🚨FRIDAY🚨 and \~50% OF THE FLOAT BEING BOUGHT BACK THROUGH A BUYBACK. Retail/WSB buying pressure on RKT would 🚀🚀🚀🚀 it to the ABSOLUTE 🌕🌕🌕.
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I personally imagine an epic runup until Friday, which could then also pop a gamma squeeze while we're at it.
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The pressure from the dividend, insane earnings, and 1B buyback have fueled the rocket. It's up to the market to launch the liftoff, and I don't know about you, but I'm not missing this one.
Positions: $23 C 3/5 x 109, $35 C 1/21/2022 x5.
I will personally be buying any dips that occur if I find an exit opportunity for my other positions. Maybe do some averaging up 🚀🚀🚀🚀
Not financial advice 🚀🚀🚀
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EDIT: If you're confused about why 3/5 when the ex-dividend date is 3/9, here is a source to my claim that because of T+2 settlement you must own by Friday.
[https://finance.zacks.com/settlement-date-occur-before-exdividend-date-receive-dividend-6289.html](https://finance.zacks.com/settlement-date-occur-before-exdividend-date-receive-div