What’s going on with RKT? It’s time to enter a position. Rocket Auto and Rocket Homes is legit.
I’ve been following since IPO and I’m very familiar with how it trades. I’m not here to convince anybody to buy and I’m not here to say other stocks suck. Go ahead and promote your stock I don’t give a shit. I’m simple stating what I believe is going to bare investors fruit soon. Great part is you don’t have to hold through all the bullshit manipulation to capitalize.
Before diving in to why I think RKT is a huge buy right now there’s something that should be discussed before reading this.
All these “meme stocks” are posted when the stock is already up 50%. Your chances of losing money is very high when you buy those levels. The sub needs to understand how to buy low and sell high even though people pride themselves on losing money for some reason. I don’t think RKT is a meme stock to be honest…and fuck that term. Just because we do our diligence as like the stock doesn’t mean it’s a fucking meme stock. I get that this is a Wendy’s, there are dumb asses, but dummies can make money too. I like the idea of buying hold and averaging down, but yolloing OTM contracts on high volatility at all time highs it’s just throwing your money in the garbage. If you think that’s cool then fine – do what you want I don’t give a shit, but you’re not helping anybody but hedge funds.
RKT is up 20% over the past two weeks. There are a lot of retail investors that we’re ready to get out at 22 and a lot of swing traders just playing the gap fill. The thing is those shares have been getting brought up.
The only reason the stock dropped as low as 16 is for two reasons: one, Gilbert transferred class D shares to class a shares for employee stock program at a 15% discount in order to increase the float and allow for more institutional ownership. This actually really helps the stock. Two, Growth funds sold the stock and now value funds are eating it up. This also includes a recent purchase from Swizzbank. The stock is trading differently and shorts are having a lot harder time manipulating it due to the institutional accumulation in the Russell 1000 and additional value funds. You can check my previous DD’s. for sources and more info.
Right now the stock just filled the gap and hit a wall around 22.7. Institutions are letting retail buy and testing their patience. Reason why institutions do this is because they need to determine whether there are real investors or just impatient little children that cry if a stock doesn’t go up 50% in 1 hour. Once they see where we are buying they won’t allow people to accumulate very long at those levels. What happens next is called a retest at 22.7. Since I’ve already been some consolidation at those levels it will most likely break and when it does break it will go to 25. If 25 creates a lot of volume and attention there are about 45,000 contracts for June 18 at 25. 25 could be a huge wall of resistance but there could be a plan in place or this could just be a fake out before it actually takes off.
I believe the floor 18.5 or 19.5 so I would look to accumulate at 20.5, 19.5, and then load up at 18.8 with a stop loss of 16ish if you want. I believe they would initiate the buyback before it gets back below 17 simply because employees get the stock at a 15% discount and Dan transferred shares at 16.8ish so I would assume the stock stays 15% above this level.
Now I wanna be very clear that this is not a fucking mortgage play. Right now that is what the market wants retail to believe. This is about a company I have previously worked for and I know firsthand that they achieve the goals set forth. They have yet to prove otherwise. Rocket homes is basically Zillow and their activity increased 300% in quarter one. Additionally rocket auto drops this August. I don’t know about you but I don’t get too thrilled going on to Carvana or Kelley blue book in order to find a car I talked to three different people before I actually get to the person that I want and then I have to find financing. Rockets mission is to make this as easy as possible so you can go onto a very clean website pick a car you want they will do the financing for you and then provide you with the vehicle. Won’t be surprised if they shipped the shit right to you eventually. Keep in mind that Detroit used to be the home of car manufacturing. Didnt Gilbert basically owns Detroit after buying up all the real estate after 2008 and has been rebuilding it since. It’s a totally different city now I have recently been there.
One thing I really want to put emphasis on is the brand. I wouldn’t be surprised if you started to see rocket homes commercials and a rocket auto commercials before September. They have also linked partnerships with golfers with big names and are using that for more marketing. As of right now they have not even started marketing these aspects but trust me it would be insane to think that they won’t make it work because if it’s one thing they know how to do it’s to market. Everyone wants the next big thing, you’ll see commercials over and over again and eventually you’ll actually see what rocket auto is about. When you see the platform you will hands-down choose it over any other bullshit website out there currently for cars. On top of that, they’ll be the ones to provide you with the loan, they’ll be the ones to profit off the sale. They don’t need a financing company like typical dealerships when you buy a car. They will fund it right to you. Competing with Zillow is a bit more of a challenge but I still think they will prevail.
The company has a shitty PE ratio right now because it’s still being valued as just a mortgage company. Institutions however aren’t stupid and know this will change once the sectors start being marketed. You can see the price action right now is it institutional accumulation before they let retail pump it up.
If you think that institutions would start buying a stock based off of mortgage credentials in a rising rate environment then I don’t know how you’ll ever be convinced. That is not what they’re doing. What I do know is that they probably believe that the amount of income they’ll receive from their new revenue streams will certainly provide RKT the capital to obtain more market share in that field. Which is lucrative.
Companies like Amazon wish they could get into mortgages. Except it’s very difficult field to just enter. No one knows anything about mortgages except for people who do it. Did you know that Lindsay gross gave a speech, He was Dan Gilbert’s roommate in college at law school. He actually expressed Amazon had an interest in mortgages, this is when the company was private. After looking over all of the financials and complications they decided they wouldn’t actually be able to be successful due to their business model. RKT got lucky and was at the right place at the right time. They merged technology with mortgages which is extremely profitable allowing for a constant stream of very high revenue, thus creating easier means to market additional revenue streams as they plan on doing.
Position: 2600 shares @ 17.86 and 100 40.89s for 2023. I also have additional calls but I don’t really like giving that information out because I’m a little paranoid about hedge funds reading this shit.
This is not advice I’m just stating the facts. If you’re looking to enter a position I believe the stock will test 25 and possibly all time highs in the next few months. I believe by 2023 it’ll be over 150 a share. I would buying share until iv dies down on options.
Another thing I want to mention is that leaps are crazy expensive right now. I wonder why.
TLDR: rocket auto and rocket homes are soon going to be a very well-known products and institutions are starting to accumulate and take notice. This is not a mortgage play this is a value play. Don’t ever listen to any articles to justify price action that’s for the sheep. It just makes sense. All you have to do is accumulate for the next two weeks and I think you’ll just see green moving forward. Below $20 a share won’t be seen after September ever again imo.
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June 10, 2021 at 02:12PM