Rocket's IPO lifts off, with first close up $3.51 per share
Rocket Cos. initial public offering recovered from some pre-opening jitters to end the day up $3.51 per share from its starting price of $18 per share.
That was down from an expected range of between $20 and $22 per share; the offering was also downsized to 100 million shares from 150 million.
In the first trades at 11:22 a.m., Rocket dropped to $17.80 per share. But that turned around very quickly, rising to $19.84 per share just 24 minutes later. Then between 1:30 and 2 p.m., Rocket began climbing again to $22.70 per share, higher than the upper end of the original expected range.
"A $36 billion [corporate] valuation was still pretty special and then to see it trade up today has been pretty heartening," said Bob Walters, Rocket's president and chief operating officer.
"A lot of terrific response. One of the things that was great was the caliber of the investors for the deal. That was really important to us, the quality of the investor base. Folks are seeing us for the long-term," Walters said. He was unable to disclose the specific investors.
It was a positive opening day for Rocket. Most of the other publicly-traded independent residential mortgage originators were up as well, the exceptions being Mr. Cooper, down $0.34 to $18.25 and Redwood Trust, down $0.15 to $6.83.
Dan Gilbert, Rocket's chairman who will still control 79% of the equity, will use the proceeds from the IPO for his foundation and to advance projects in the company's hometown of Detroit and Cleveland, where he owns the National Basketball Association's Cavaliers franchise, Walters said.
Meanwhile, Rocket's stock is a currency for a number of different items, Walters said.
"One of the things we're going to do is give every one of our 20,000 team members shares in the company; that was important to Dan. We also want to use it to attract talent, particularly technology and engineering talent,” he explained.
"To the extent that there may be some acquisitions in the future that advance our digital focus, that would also be one of the things. It gives us more flexibility," Walters added.
Even though the parent company and its most prolific program, Rocket Mortgage, share a name, don't expect the Quicken name, which it kept on a licensing agreement after Gilbert repurchased the company from Intuit, to disappear.
"Rocket is the brand and it's been our brand for a while now. [But] Quicken remains a really important, highly sought after brand as well," Walters explained. "And so we'll continue to use that, but Rocket is the key brand for what we're driving towards."