$RKT FUD is mainly revolved around interest rates rising and price war with competitors. While I think these are valid risks to earnings growth I believe $RKT is equipped to weather the storm better than anyone else as long as they use their brain and not just aimlessly go for more market share with advertising without balance. Here is what I think $RKT should be aiming for next earnings call to ease these concerns:
- Boast about their record triple digit % growth in Rocket Homes and Rocket Autos. I believe if there will be any upside surprise next earnings it will come from these two areas. With housing prices and auto prices still on the rise I think the revenue will only compound to the upside if triple digit growth in these revenue streams continue. Showing revenue growth in these two areas will prove to investors $RKT is not only a company that will make money when interest rates go down for people to refinance. I will first and foremost need to see high % growth in both of these areas to stay bullish.
- Rocket Homes. I want to hear in more detail how they plan to leverage their Rocket Homes app to compete and beat Zillow at their own game. I want them to give some data on how app users are behaving for example, downloads per month growth, number of clicks within the app, time spent on app, ect. Rocket Homes has the ability to get your loan through the app and find a real estate agent having a one stop shop for purchasing a home. Zillow is catching on and now offering loans through their app. Rocket Homes should be looking for ways to steer real estate agents away from Zillow and onto Rocket Homes along with consumers.
- Rocket Autos. Rocket Autos as far as I'm aware does not have an app yet. I want to hear some detail revolving how they plan to streamline this process direct to consumer through an app similar to how Carvana got into the game. When they do Rocket will have a unique advantage to Carvana because they can offer the loan and financing through the app, similar to Rocket Homes, so when people go to buy a car so they know what they can afford. I think a timeline on when they expect to launch the app would be necessary for shareholders to be in the loop on or at least where progress stands to confirm they are going down this road (pun intended).
- I love the Amazon logic of "we are going to take as much market share as possible by lowering our prices and taking a lower gain on sale to win market share" BUT I do think there is a balance and that balance can come from lowering their ever growing marketing expense line on the income statement. We've all seen Rocket Company commercials, PGA sponsorship, signs at sporting events, ect. I would love to see marketing get trimmed down in order to deliver positive or constant earnings growth in order to win the price war with $UWMC faster because I do think $UWMC will eventually drop the broker ultimatum (which is only hurting mortgage brokers not $RKT). By the way I am not against $UWMC before you start hating on me I think you can make money on both of these stocks I just like $RKT better because of all of their revenue streams and direct to consumer access.
- Finally as an alternative to point 4 about lowering the marketing budget to increase earnings would be to initiate the up to $1 billion share buy back program they announced last November. AMD share buyback was a huge catalyst for the stock to move from $75 to $90 and I think it would be a big catalyst for $RKT as well.
Bottom line is $RKT needs to begin caring about their shareholders and flexing a little more for the beast company that it is. This is a company that can be insanely more profitable than it currently is if it wanted to be but it's currently choosing to forgo profit to reinvest and grow their current business and new revenue streams. Either deliver earnings or show us you're going to win big in these 3 markets.