SHAREHOLDER ALERT: Law firm Pomerantz reminds shareholders who suffered losses on their investment in Rocket Companies, Inc. of class action and upcoming deadline – RKT

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NEW YORK, July 18, 2021 / PRNewswire / – Pomerantz LLP announces that a class action lawsuit has been filed against Rocket Companies, Inc. (“Rocket” or the “Company”) (NYSE: RKT) and certain of its officers. The class action, filed in United States District Court of the Eastern District of Michigan, South Division, and listed as 21-cv-11618, is in the name of a class consisting of all persons and entities other than the Defendants who have purchased or otherwise acquired class A common shares of Rocket between February 25, 2021 and May 5, 2021, both dates inclusive (the “Class Period”), seeking recourse under the Securities Exchange Act of 1934 (the “Exchange Act”) against Rocket and certain of the senior officers of the Company.

If you are a shareholder who purchased or otherwise acquired Class A common shares of Rocket during the Class Period, you have up to August 30, 2021 ask the court to appoint you as the principal plaintiff for the class. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, Ext. 7980. Those inquiring by e-mail are encouraged to provide their mailing address, telephone number and the number of shares purchased.

[Click here for information about joining the class action]

Rocket is the largest mortgage originator in the United States, with an estimated 9.2% market share in March, 31st, 2020. The Company operates two main segments: (i) the Direct to Consumer segment; and (ii) the partner network segment. In its Direct-to-Consumer segment, Rocket interacts directly with customers and prospects using a variety of performance marketing channels. In its Partner Network segment, Rocket partners with third parties who use the Company’s platform to provide their clients with mortgage solutions.

Rocket’s mortgage origination business generates income primarily from the gain on loan sales, which includes loan origination costs, income from the sale of loans in the secondary market, as well as the fair value of mortgage service fees created and coverage gains and losses. One of the most important metrics to measure Rocket’s financial performance is the Company’s Selling Margin Gain, which refers to the company’s net gain on the sale of loans divided by the net rate lock-in volume for period, excluding any reverse mortgage activity. Net rate blocking volume refers to the outstanding principal balance of loans issued by the Company subject to interest rate blocking commitments, net of certain factors identified by the Company. Gain on sales margin is viewed by investors as a critical measure of Rocket’s profitability.

The complaint alleges that, throughout the Class Period, the Defendants made materially false and misleading representations regarding the Company’s business, operational and compliance policies. Specifically, the Defendants made false and / or misleading statements and / or failed to disclose that: (i) Rocket’s gains on sales margins were contracting at the highest rate in two years due to a increased competition among mortgage lenders, an unfavorable shift to the operational segment of the lower margin partner network and compression of the price differential between the primary and secondary mortgage markets; (ii) Rocket was engaged in a price war and a battle for market share with its main competitors in the wholesale market, which further squeezed the margins of the operating segment of Rocket’s partner network; (iii) the adverse trends identified above were accelerating and, as a result, the gain on Rocket’s sales margins was on track to decline by at least 140 basis points in the first six months of 2021; (iv) as a result of the foregoing, the favorable market conditions which had preceded the Class Period and allowed Rocket to achieve a historically high gain on selling margins had disappeared while the Company’s gain on margins sales had returned to levels not seen since the first quarter of 2019; (v) instead of remaining high due to increased demand, Rocket’s company-wide selling profit margins were significantly lower than recent historical averages; and (vi) as a result of the foregoing, the Defendants’ positive statements regarding the Company’s business operations and prospects were substantially misleading and / or lacked reasonable basis.

At May 5, 2021, Rocket issued a press release announcing its first quarter results and outlook for the second quarter. Rocket has indicated he is on track to achieve closed loan volume in a range of just $ 82.5 billion and $ 87.5 billion and a gain on selling margins in the range of only 2.65% to 2.95% for the second quarter of 2021. At mid-term, this estimated gain on selling margin was equivalent to a YoY down 239 basis points and a sequential drop of 94 basis points, the company’s smallest quarterly profit margin gain in two years. The collapse of the Company’s selling margin gain reflected the fact that favorable market conditions allegedly experienced by the Company during the Class Period had in fact been reversed. During a conference call to explain the results, Rocket’s CFO and treasurer, the defendant Julie r booth, revealed that the sharp drop in the quarterly profit on the commercial margin was due to three factors: (i) pressure on loan pricing; (ii) a reorientation of the product line towards the segment of Rocket’s low-margin partner network; and (iii) compression of price differentials between the primary and secondary mortgage markets.

On this news, the price of Rocket’s Class A common stock fell $ 3.79 per share, or 16.62%, to close at $ 19.01 per share on May 6, 2021, on a significant volume of more than 37 million shares traded. As the market continued to digest the news in the days that followed, the price of Rocket’s Class A common stock continued to decline, falling to a low of just $ 16.48 per share per May 11, 2021.

The Pomerantz firm, with offices in new York, Chicago, Los Angeles, and Paris is recognized as one of the leading firms in the areas of corporate law, securities and antitrust litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class actions bar, the Pomerantz law firm was a pioneer in the field of class actions in securities. Today, more than 80 years later, Pomerantz continues the tradition it established, fighting for the rights of victims of securities fraud, breach of fiduciary duty and professional misconduct. The firm has recovered numerous multi-million dollar damages on behalf of the members of the group. See www.pomerantzlaw.com

CONTACT:
Robert S. Willoughby
Pomerantz srl
rswilloughby@pomlaw.com
888-476-6529 ext 7980

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SOURCE Pomerantz LLP


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