Shares of online mortgage provider Rocket Companies sank 33% Wednesday, tanking the fortune of the Detroit company’s billionaire founder, Dan Gilbert, after a wild Tuesday rally that saw shares skyrocket 70% at the hands of retail traders pumping up the heavily shorted stock, the latest sign the market mania underpinning GameStop’s surge has yet to subside.
Rocket Companies’ Wednesday plunge tanked Gilbert’s fortune by about $25.4 billion one day after shares of the heavily shorted firm skyrocketed 71%, making Gilbert the world’s tenth-richest person at Tuesday’s close.
The Detroit native’s net worth soared nearly $33 billion during trading hours Tuesday as shares traded hands an eye-popping 360 million times–more than 70 times the volume just one week prior.
BTIG Chief Equity and Derivatives Strategist Julian Emanuel called Rocket Companies Tuesday’s “meme stock of the day,” in a note to clients, likening the surge to the temporary “parabolic” increases in GameStop and bitcoin while echoing comments from a Barclays analyst who said the surge felt “very much” retail-driven and was likely a short squeeze.
Though well below GameStop’s more than 100% short interest peak (as a percentage of shares available to trade), Rocket Companies’ 37% short interest is more than 10 times the average of 3% in the S&P 500.
Amid the trading frenzy, Rocket Companies chatter has dominated Reddit’s WallStreetBets discussion board: “[GameStop] is not the only stock that exist[s]… This rocket squeeze was created by the CEO of rocket… he hates shorts as much as we do,” one poster said Wednesday, garnering nearly 10,000 upvotes.
Despite the sharp price decline Wednesday, Rocket Companies shares are still about 30% higher than they were at the end of last week, and Gilbert, who also owns the NBA’s Cleveland Cavaliers, is about $10 billion richer since.
$57.3 billion. That’s how much Gilbert is worth, as of Wednesday’s market close, making him the 21st richest-person in the world.
59-year-old Gilbert took Rocket Companies public for a second time in August, 35 years after he founded its mortgage-lending subsidiary, Quicken Loans. The firm’s debut on the New York Stock Exchange lifted Gilbert’s fortune by more than $33 billion in just its first trading day. He sold about $1.8 billion worth of stock at the time but still owns close to 95% of shares.
“The trading patterns in the likes of GameStop and AMC Entertainment over the last several weeks have unnerved market sentiment but were more of a peripheral amusement than a core macroeconomic concern,” Vital Knowledge Media Founder Adam Crisafulli said Wednesday. “However, that’s going to shift with the nonsense activity starting to spread to more serious firms, like Rocket Companies.”
GameStop shares have held up after a recent resurgence in late September, showing just how easily prices in low-volume stocks can be influenced by an influx of bullish trading activity. Despite at one point tanking nearly 80% from a late-January high, GameStop is still up 540% this year.
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