Johnson Fistel, LLP Files Class Action Suit Against Rocket Companies (RKT)
SAN DIEGO, June 30, 2021, / (Globe Newswire)
Johnson Fistel, LLP announces that a class action lawsuit has commenced on behalf of shareholders of Rocket Companies, Inc. (NYSE: RKT) Class A common. The class action is on behalf of shareholders who purchased Rocket Companies between February 25, 2021 and May 5, 2021, both dates inclusive (the “Class Period”). If you wish to serve as lead plaintiff in this class action, you must move the Court no later than August 28, 2021.
[click here to join this action]
The Rocket Companies class action lawsuit charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934.
The Rocket Companies class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) Rocket Companies’ 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; (ii) Rocket Companies 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 Companies’ Partner Network operating segment; (iii) the adverse trends identified above were accelerating and, as a result, Rocket Companies’ gain on sale margins were on track to plummet at least 140 basis points in the first six months of 2021; (iv) as a result, the favorable market conditions that had preceded the Class Period and allowed Rocket Companies to achieve historically high gain on sale margins had vanished as Rocket Companies’ gain on sale margins had returned to levels not seen since the first quarter of 2019; (v) rather than remaining elevated due to surging demand, Rocket Companies’ company-wide gain-on-sale margins had fallen materially below pre-pandemic averages; and (vi) consequently, defendants’ positive statements about Rocket Companies’ business operations and prospects were materially misleading and/or lacked a reasonable basis.
On May 5, 2021, Rocket Companies 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. At the mid-point, this gain on sale margin estimate equated to a 239 basis point decline year-over-year and a 94 basis point decline sequentially, which represented Rocket Companies’ lowest quarterly gain on sale margin in two years. The stunning collapse in Rocket Companies’ gain on sale margin reflected the fact that the favorable market conditions purportedly being experienced by Rocket Companies during the Class Period had, in fact reversed. During a conference call to explain the results, Rocket Companies’ Chief Financial Officer and Treasurer, defendant Julie R. Booth, revealed that the sharp decline in quarterly gain on sale margin was being caused by three factors: (i) pressure on loan pricing; (ii) a product mix shift to Rocket Companies’ lower margin Partner Network segment; and (iii) a compression in price spreads between the primary and secondary mortgage markets. Defendant Booth also admitted that certain of these trends began “at the end of Q1.” On this news, the price of Rocket Companies Class A common stock fell by nearly 17% to close at $19.01 per share. As the market continued to digest the news in the days that followed, the price of Rocket Companies Class A common stock continued to decline, falling to a low of just $16.48 per share by May 11, 2021.
A lead plaintiff will act on behalf of all other class members in directing the Rocket Companies class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the class-action case. An investor’s ability to share any potential future recovery of the Rocket Companies class action lawsuit is not dependent upon serving as lead plaintiff. If you are interested in learning more about the case, please contact Jim Baker (firstname.lastname@example.org) at 619-814-4471. If you email, please include your phone number.
Additionally, you can [click here to join this action]. There is no cost or obligation to you.
About Johnson Fistel, LLP:
Johnson Fistel, LLP is a nationally recognized shareholder rights law firm with offices in California, New York and Georgia. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits. For more information about the firm and its attorneys, please visit http://www.johnsonfistel.com. Attorney advertising. Past results do not guarantee future outcomes.
Johnson Fistel, LLP
Jim Baker, 619-814-4471