5/8/2023 0 Comments Rocket companiesIn addition, I believe Rocket Money has the potential to contribute positively to Rocket Companies' bottom line and boost the efficiency of the company as a whole.įor context, in the past, RKT's top-of-funnel growth strategy involved acquiring more leads with an interest in mortgage products. Rocket Money, at its core, paves the way for a novel method of customer acquisition by directing new clients into its own channels. The acquisition essentially increases RKT's top-of-funnel reach and opens up possibilities for boosting conversion rates further down the funnel. I believe the acquisition of Rocket Money has structurally improved RKT's business from a cost perspective by reducing customer acquisition costs, which is the biggest cost for the company. Truebill was then re-branded as Rocket Money. The app allows users to link their bank accounts, credit cards, and investment accounts to the platform to get insights into their spending behaviors and net worth. RKT acquired Truebill, an app that helps users manage their finances, in December 2020. Which means, it is unlikely that RKT will see another huge wave of refi like it did previously anytime soon. There is mounting evidence that interest rates will remain elevated (higher inflation, unemployment rates still low, etc) for an extended period of time. Even though servicing has performed better in the rising rate environment, this improvement is not nearly enough to compensate for the decline in origination profits. Due to the intense competition in the Partner market, segment margins have shrunk dramatically (from 4-5% to 2%+). In addition, competition has been fierce within the Partner industry. But that's not the case now because rates are too high for any sane person to consider refinancing (unless forced to). With the fed funds rate hovering around 0%, it was much simpler for RKT to convince the market that it was successful in utilizing its brand and technology to take share among a record-setting wave of refi. Current 30-year mortgage rates are around 6.4%, which is over twice as high as when RKT went public (~3%). The originations divisions of Rocket Mortgage have faced headwinds due to the rapid increase in interest rates. However, all of that don't matter anyway given the change in today's macro environment, specifically, interest rates. However, after acquiring Rocket Money, it significantly expanded its market presence and revenue streams. Throughout time, investors have looked to RKT mortgage operations as the company's future growth engine. Hence, I am recommending a sell rating for the near term. Although I still see RKT as a mortgage industry champion in the long run, I think the company's size and scope, as well as a greater reliance on refinancing activity, present additional difficulties if mortgage rates stay elevated for an extended period. RKT's rise to the top of a large, fragmented, profitable, and established market is the central argument for its bullish case. Tags: Richard Branson Virgin Galactic Science news space news Virgin Orbit LauncherOne Virgin Orbit Bankruptcy Follow Science News on abp LIVE for more latest stories and trending topics.Rocket Companies ( NYSE: RKT) collection of personal lending and mortgage finance businesses RKT has, over time, built a unified, end-to-end tech platform that is simplifying originations and shaking up a multi-trillion dollar mortgage industry. Hart said that Virgin Orbit's team had created "cutting edge launch technology" because of which he was confident the company had a "wide appeal" to a new owner. Hart also said that Virgin Orbit will now try to find a buyer for the business to provide clarity on the future of the company to its customers, vendors and employees.Īfter the failed Cornwall launch, it was challenging for Virgin Orbit to find new funding.Īccording to the report, Virgin Orbit said Tuesday that Virgin Investments, one of the sister companies of the rocket firm, will provide $31.6 million in new money to help Virgin Orbit through the process of finding a new buyer. Quoting Virgin Orbit President and CEO Dan Hart, the report said that although the company had taken great efforts to address its finances and secure more funding, the firm must ultimately do what is best for the business.
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