NEW YORK--(BUSINESS WIRE)--The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Eastern District of Michigan on behalf of those who acquired Rocket Companies, Inc. (“Rocket” or the “Company”) (NYSE: RKT) securities from February 25, 2021 through May 5, 2021, inclusive (the “Class Period”). Investors have until August 30, 2021 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
Rocket is an online mortgage lender that operates the Rocket Mortgage online platform, which allows clients to apply for and service mortgages through the Internet or by using Rocket’s proprietary mobile phone app. Rocket operates two primary segments: (1) the Direct-to-Consumer segment; and (2) the Partner Network segment.
On May 5, 2021, Rocket issued a press release announcing its first quarter results and second quarter outlook. Rocket reported that it was on track to achieve closed loan volume within a range of only $82.5 billion and $87.5 billion and gain on sale margins within a range of only 2.65% to 2.95% for the second quarter of 2021. On this news, Rocket’s share price declined by $3.79 per share, or approximately 16.62%, from $22.80 per share to close at $19.01 per share on May 6, 2021.
The lawsuit alleges throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (1) Rocket’s gain on sale margins were contracting at the highest rate in two years as a result of increased competition among mortgage lenders, an unfavorable shift toward the lower margin Partner Network operating segment and compression in the price spread between the primary and secondary mortgage markets; (2) Rocket was engaged in a price war and battle for market share with its primary competitors in the wholesale market, which was further compressing margins in Rocket’s Partner Network operating segment; (3) the adverse trends were accelerating and, as a result, Rocket’s gain on sale margins were on track to plummet at least 140 basis points in the first six months of 2021; (4) as a result of the above, the favorable market conditions that had preceded the Class Period and allowed Rocket to achieve historically high gain on sale margins had vanished as Rocket’s gain on sale margins had returned to levels not seen since the first quarter of 2019; (5) rather than remaining elevated due to surging demand, Rocket’s gain on sale margins had fallen materially below recent historical averages; and (6) as a result of the foregoing, the defendants’ positive statements about Rocket’s business operations and prospects were materially misleading and/or lacked a reasonable basis.
If you purchased or otherwise acquired Rocket securities, have information, or would like to learn more about these claims, please contact Thomas W. Elrod of Kirby McInerney LLP at 212-371-6600, by email at investigations@kmllp.com, or by filling out this contact form, to discuss your rights or interests with respect to these matters without any cost to you.
Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP’s website: http://www.kmllp.com.
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