Rocket Companies, like the besieged retailer GameStop (NYSE: GME), have significant interest from short sellers or investors who bet that the stock price of a particular stock will fall. Short sellers, usually professional investors, have become something of an enemy of Reddit users, who are generally considered retail investors.
On February 12, Rocket’s shares were more sold than GameStop now, with nearly 40% of its outstanding shares being held by those with a short stake, according to MarketWatch. Rocket ranked as the ninth best-selling stock based on MarketWatch data.
Another twist in the rise of Rocket’s shares is a special shareholder payment declared last week, which may come at a cost to short sellers.
Only 30% of GameStop’s shares are short. However, the Texas-based retailer has more than 50 million fewer shares available for trading. The pharmaceutical company Esperion Therapeutics Inc. (NASDAQ: ESPR), based in Ann Arbor, also stands out as one of the best-selling stocks, based on MarketWatch data, with more than 35% of its 26.9 million shares being held by short sellers.
The number of short sellers taking an interest in Rocket makes it a natural company for Reddit users to increase: “With 35-40% of the shorts floating around, the moon is the limit …” wrote a user on Monday night- market.
Rocket Companies CEO Jay Farner, in an interview in late January on CNBC, acknowledged that as a relatively new publicly traded company – Rocket made its initial public offering in August – investors looking to profit by betting against the company come with the territory.
In that interview, he thought, Farner launched a well-aimed shot at the company’s short sellers, looking at Rocket’s long history of profitability, which last year was more than $ 9 billion.
“My advice is that this is not a stock in which you want to go short,” Farner told CNBC. “You may want to rethink your position if that’s how you’re playing. We have a great track record and a lot of exciting things we’re working on.”
Rocket representatives did not immediately respond to a request for comment on recent stock activity.
Gilbert and other close executives control about 95% of the company.
Along with last week’s strong earnings report, Rocket also announced a $ 1.11 dividend per share to be paid to all Class A shareholders later this month. This dividend could serve as a mechanism for the company to liquidate short sellers with a stake in Rocket, pursuant to the regulations of the U.S. Securities and Exchange Commission, determine that if a company pays a dividend, those who hold a short position must then pay the dividend to the company, rather than receiving it. .
Rocket currently has more than 43 million shares sold short.
GameStop in late January became the initial “meme” action, while retail investors and others tried to oppose short-held holders at the video game retailer. The company struggled profitably for years as video game sales moved away from physical stores to online commerce.