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DavidChang88
2021-04-23
Sti etf
DavidChang88
2021-04-23
Tesla ftw
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DavidChang88
2021-04-23
Rocket to Rocket to the moon
Rocket Companies Could Crash to Earth If Interest Rates Keep Rising
Go to Tiger App to see more news
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charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla branded as 'arrogant' in China as pressure mounts on the electric carmaker</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla branded as 'arrogant' in China as pressure mounts on the electric carmaker\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-23 11:14 GMT+8 <a href=https://www.cnbc.com/2021/04/23/tesla-in-china-pressure-mounts-on-carmaker-after-customer-protest.html><strong>cnbc</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>KEY POINTS\n\nA woman who claimed to be a Tesla customer protested an alleged brake failure in her car at the company's booth at the Shanghai auto show.\nTesla claimed the woman had a collision due to a ...</p>\n\n<a href=\"https://www.cnbc.com/2021/04/23/tesla-in-china-pressure-mounts-on-carmaker-after-customer-protest.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://www.cnbc.com/2021/04/23/tesla-in-china-pressure-mounts-on-carmaker-after-customer-protest.html","is_english":true,"share_image_url":"https://static.laohu8.com/72bb72e1b84c09fca865c6dcb1bbcd16","article_id":"1112650554","content_text":"KEY POINTS\n\nA woman who claimed to be a Tesla customer protested an alleged brake failure in her car at the company's booth at the Shanghai auto show.\nTesla claimed the woman had a collision due to a speeding incident and has been negotiating with her since February.\nChinese state media branded the company's response as \"arrogant\" and regulators are increasing their scrutiny of the company.\n\nBEIJING and GUANGZHOU, China —Teslafaces mounting pressure in China as state media and regulators criticize the electric carmaker following an alleged customer's protest at a major auto show this week.\nTesla could be facing one of its worst public relations crises in China, a market investors see as critical for its future growth.\nOn Monday, a woman who claimed to be a Tesla customer stood atop one of the company's cars at the Shanghai auto show with a T-shirt that read \"brakes don't work\" in Chinese. She was protesting an alleged brake failure in her car — an issue which other Chinese social media users claiming to be Tesla drivers have complained about in the last several months. A video of the incident went viral on Chinese social networks and was picked up bystate media.\nOn Tuesday, Shanghai police identified the protester by her surname Zhang and said she was sentenced to five days detention for disturbing public order.\nTeslaallegedthe woman was involved in a collision in February due to “speeding violations” and that in their two months of negotiations, she would not allow a third-party inspection but insisted on a refund for the car.\nCriticism for being ‘arrogant’\nTesla’s vice president for China, Tao Lin, claimed in an interview Monday with Chinese financial news publication Caijing that the woman hoped for a high level of compensation, and the company doesn’t have any reason to give it to her.\nIn a post on Twitter-like service Weibo, Tesla said it would not compromise with “unreasonable demands.”\nBoth state media and a government agencies were quick to reprimand Tesla. State-run news outlets published a string of editorials, while the Chinese government’s central disciplinary commission issued a warning statement.\n\n The arrogant and overbearing stance the company exhibited in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market.State-backed Chinese publication Global Times, on Tesla\n\nOne state media article titled “Three lessons Tesla ought to learn” advised the U.S.-based electric automaker not to be “arrogant” and to “respect” the Chinese consumer market. That’s according to a CNBC translation of the Chinese-language text.\n“The arrogant and overbearing stance the company exhibited in front of the public is repugnant and unacceptable, which could inflict serious damage on its reputation and customer base in the Chinese market,” state-backed tabloid the Global Times said in a separate opinion piece published Wednesday.\nTesla apologized in a statement for not solving the car owner’s problems in a timely manner.\nIn two Weibo posts on Monday and Tuesday, Tesla said that it’s willing to cooperate with authorities. The company said it will carry out “self-examination and self-correction” to “rectify” problems with its customer service process.\nOn Thursday, Tesla said it handed over raw vehicle data to Zhang from 30 minutes before the crash in question took place. The company has also been in communication with two market regulators.\nTesla’s rise in China\nTesla has been a poster child for Beijing’s efforts to demonstrate that China is letting more foreign businesses into its relatively closed market.\nTesla has stepped up its focus on China in the last two years. With the support of the government, Teslabroke ground on a major Shanghai factory in 2019andlast year began delivering Model 3 vehicles made at that siteto customers in China.\n\n Letting the market leader in was very much in China’s interest, but letting the market leader dominate the market is not in China’s interest.Bill RussoFOUNDER AND CEO OF AUTOMOBILITY LIMITED\n\nTesla’s China sales more than doubled in 2020, and the Model 3 was the best-selling electric car in the country.\nCEO Elon Musk even met with Premier Li Keqiang in 2019. But with success comes scrutiny, especially as China’s homegrown companies look for a larger slice of the growing electric vehicle market.\nChina’s favorable policies toward electric cars have spurred the creation of a number of start-ups hoping to compete with Tesla such asNioandXpeng Motors, although their sales are still far behind Tesla’s.\n“Letting the market leader in was very much in China’s interest, but letting the market leader dominate the market is not in China’s interest,” Bill Russo, founder and CEO of consulting and investment firm Automobility Limited, said.\nRusso noted that companies including Daimler’s Mercedes unit and Volkswagen have gone through similar periods of scrutiny in the past.\nRising scrutiny of Tesla\nNegative press about Tesla in China has increased in the last several months. Earlier this year, aTesla Model 3 reportedly exploded in a Shanghai parking garage, while astate media articlesaid there were at least 10 reports in 2020 of Tesla drivers losing control of their cars in the country.\nChina has alsoreportedly restricted the use of Tesla carsamong state and military personnel over concerns that the vehicle’s sensors could record images of their surrounding locations. Musk saidhis company would be shut down if its cars could be used to spy.\nMeanwhile, China’s market regulator, the State Administration for Market Regulation, met with Tesla’s local subsidiaries in February over increased consumer reports of vehicle problems. On Wednesday, the regulator issued a statement saying it places high importance on the Shanghai auto show incident. The authority said it has instructed local regulators to protect consumer interests.\nMusk has looked to fend off the scrutiny. In March, he gave an interview to state broadcaster CCTV saying that the future of China is “going to be great” and that the country will be Tesla’s “biggest market.”","news_type":1},"isVote":1,"tweetType":1,"viewCount":63,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":372087040,"gmtCreate":1619158668980,"gmtModify":1704720554567,"author":{"id":"3581279796495360","authorId":"3581279796495360","name":"DavidChang88","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581279796495360","authorIdStr":"3581279796495360"},"themes":[],"htmlText":"Rocket to Rocket to the moon","listText":"Rocket to Rocket to the moon","text":"Rocket to Rocket to the moon","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/372087040","repostId":"1129669982","repostType":4,"isVote":1,"tweetType":1,"viewCount":86,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":372084135,"gmtCreate":1619158584227,"gmtModify":1704720552924,"author":{"id":"3581279796495360","authorId":"3581279796495360","name":"DavidChang88","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581279796495360","authorIdStr":"3581279796495360"},"themes":[],"htmlText":"Sti etf","listText":"Sti etf","text":"Sti etf","images":[{"img":"https://static.tigerbbs.com/19187b0a159e4469eba2afec3d3fad3b","width":"1080","height":"2089"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/372084135","isVote":1,"tweetType":1,"viewCount":94,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"EN","totalScore":0}],"hots":[{"id":372084135,"gmtCreate":1619158584227,"gmtModify":1704720552924,"author":{"id":"3581279796495360","authorId":"3581279796495360","name":"DavidChang88","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581279796495360","authorIdStr":"3581279796495360"},"themes":[],"htmlText":"Sti etf","listText":"Sti etf","text":"Sti etf","images":[{"img":"https://static.tigerbbs.com/19187b0a159e4469eba2afec3d3fad3b","width":"1080","height":"2089"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/372084135","isVote":1,"tweetType":1,"viewCount":94,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"EN","totalScore":0},{"id":372087714,"gmtCreate":1619158852138,"gmtModify":1704720557196,"author":{"id":"3581279796495360","authorId":"3581279796495360","name":"DavidChang88","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581279796495360","authorIdStr":"3581279796495360"},"themes":[],"htmlText":"Tesla ftw","listText":"Tesla ftw","text":"Tesla ftw","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/372087714","repostId":"1112650554","repostType":4,"isVote":1,"tweetType":1,"viewCount":63,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":372087040,"gmtCreate":1619158668980,"gmtModify":1704720554567,"author":{"id":"3581279796495360","authorId":"3581279796495360","name":"DavidChang88","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3581279796495360","authorIdStr":"3581279796495360"},"themes":[],"htmlText":"Rocket to Rocket to the moon","listText":"Rocket to Rocket to the moon","text":"Rocket to Rocket to the moon","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/372087040","repostId":"1129669982","repostType":4,"repost":{"id":"1129669982","kind":"news","pubTimestamp":1619155986,"share":"https://ttm.financial/m/news/1129669982?lang=&edition=fundamental","pubTime":"2021-04-23 13:33","market":"us","language":"en","title":"Rocket Companies Could Crash to Earth If Interest Rates Keep Rising","url":"https://stock-news.laohu8.com/highlight/detail?id=1129669982","media":"InvestorPlace","summary":"RKT stock makes 96% of its revenue from the gain on sale of loans which could fall if rates rise.\n\nR","content":"<blockquote>\n <b>RKT stock makes 96% of its revenue from the gain on sale of loans which could fall if rates rise.</b>\n</blockquote>\n<p><b>Rocket Companies</b>(NYSE:<b><u>RKT</u></b>), home of Rocket Mortgage and Quicken Loans, is a massive direct-to-consumer mortgage lender. It’s the same business model<b>GEICO</b>uses to sell car insurance without agents.</p>\n<p>Rocket has becomethe largest mortgage lender in the U.S, according to its CEO. That’s great. However, this also means that if interest rates keep on rising, RKT stock could be hit hard.</p>\n<p>The two most important driving factors for Rocket Companies are interest rates and market share growth in mortgage lending. But by far, the biggest influence has been the direction of interest rates.</p>\n<p><b>Gain On Sale of Loans</b></p>\n<p>The reason? More than 96% of Rocket’s revenues now come from a line in its income statement called, “Gain on Sale of Loans, net.” You can see this onpage 54 of the company’s annual reportwhere it lists the past 5 years’ sources of its revenue.</p>\n<p>This page shows that of the total 2020 revenue of $15.735 billion, 95.8% of that amount or $15.07 billion came from its flipping loans that it originated. This is much higher, as you can see than five years ago. In 2016, Rocket made just 79.2% of its revenue from “Gain on Sale” revenue. It shot up 200% in 2020 from $4.91 billion.</p>\n<p>In other words, flipping loans is now the most important source of their revenue, despite all their other businesses.</p>\n<p>If you take out a loan with Rocket or Quicken loans, within a few days those loans are sold to someone else. Rocket keeps the right to service the loan and collect your mortgage payments, but they do not keep the loan on their books.</p>\n<p>So they essentially make a spread or arbitrage, if you will, including fees, on the sale of that loan. That gain on loan sale (GOS) is measured as a percentage of their investment. For example, on page 61 of the annual report (actually page 88 of the actual document) you can see these margins.</p>\n<p>On the fifth line down you can see that in 2020, Rocket made a 4.46% margin on its gain on sale revenue. This is now much over 25% higher than in 2018 when the GOS margin was 3.55%.</p>\n<p>But the problem is that what drove this growth is lower interest rates, refinancing volume and people being stuck in their homes to remodel them. The opposite is starting to happen.</p>\n<p>Rates are slowly rising, partly from pent-up inflationary demands throughout the whole economy. This could dramatically dampen the volume of mortgages that Rocket does, especially if refinancing dries up.</p>\n<p>Moreover, this will have a double whammy effect on the Rocket’s GOS margins. A portion of the gain of sale margin includes the value of the servicing rights that come along with the sale of a loan. So as volume dries up, its servicing loan revenue will also take a hit.</p>\n<p>Last year, servicing fee income (which you can seeon page 54), the next line down, was $1.074 billion, its third-largest revenue source (6.8%). There is no reason why GOS income and loan servicing income couldn’t fall back to 2019 levels.</p>\n<p><b>Market Share Growth</b></p>\n<p>You can see in the line on page 61 (actual 88 of the annual report) just above the GOS margin, that Rocket has had a huge increase in market share. In 2018 they produced 5.0% market share of all U.S. mortgage loan originations. Last year, that rose by 48% to 8.4%.</p>\n<p>This is also likely to continue as people migrate to using Rocket and Quicken’s direct-to-consumer mortgage apps, etc.</p>\n<p>But the good news is that as Rocket continues to pick up market share this can help to ameliorate any downturn in GOS and loan servicing revenue. That implies that more and more people will move away from mortgage brokers and/or use Rocket’s partners for their loans. However, if that market share growth falters and interest rates rise, there could be a massive hit on the company’s revenue</p>\n<p><b>What to Do With RKT Stock</b></p>\n<p>It’s hard to forecast the earnings for this company. It all depends on your outlook for interest rates. Market share growth is important. But the bottom line is, if people don’t originate new loans with higher rates, RKT stock won’t launch off the pad.</p>\n<p>By my calculations, give that public shareholders have just an 8% economic interest in the total earnings and equity, RKT stock trades for over 5.5 times book value. This is a very high ratio. Let buyers beware if interest rates were to rise.</p>","source":"lsy1606302653667","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rocket Companies Could Crash to Earth If Interest Rates Keep Rising</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRocket Companies Could Crash to Earth If Interest Rates Keep Rising\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-04-23 13:33 GMT+8 <a href=https://investorplace.com/2021/04/rocket-companies-could-crash-to-earth-if-interest-rates-keep-rising/><strong>InvestorPlace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>RKT stock makes 96% of its revenue from the gain on sale of loans which could fall if rates rise.\n\nRocket Companies(NYSE:RKT), home of Rocket Mortgage and Quicken Loans, is a massive direct-to-...</p>\n\n<a href=\"https://investorplace.com/2021/04/rocket-companies-could-crash-to-earth-if-interest-rates-keep-rising/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RKT":"Rocket Companies"},"source_url":"https://investorplace.com/2021/04/rocket-companies-could-crash-to-earth-if-interest-rates-keep-rising/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1129669982","content_text":"RKT stock makes 96% of its revenue from the gain on sale of loans which could fall if rates rise.\n\nRocket Companies(NYSE:RKT), home of Rocket Mortgage and Quicken Loans, is a massive direct-to-consumer mortgage lender. It’s the same business modelGEICOuses to sell car insurance without agents.\nRocket has becomethe largest mortgage lender in the U.S, according to its CEO. That’s great. However, this also means that if interest rates keep on rising, RKT stock could be hit hard.\nThe two most important driving factors for Rocket Companies are interest rates and market share growth in mortgage lending. But by far, the biggest influence has been the direction of interest rates.\nGain On Sale of Loans\nThe reason? More than 96% of Rocket’s revenues now come from a line in its income statement called, “Gain on Sale of Loans, net.” You can see this onpage 54 of the company’s annual reportwhere it lists the past 5 years’ sources of its revenue.\nThis page shows that of the total 2020 revenue of $15.735 billion, 95.8% of that amount or $15.07 billion came from its flipping loans that it originated. This is much higher, as you can see than five years ago. In 2016, Rocket made just 79.2% of its revenue from “Gain on Sale” revenue. It shot up 200% in 2020 from $4.91 billion.\nIn other words, flipping loans is now the most important source of their revenue, despite all their other businesses.\nIf you take out a loan with Rocket or Quicken loans, within a few days those loans are sold to someone else. Rocket keeps the right to service the loan and collect your mortgage payments, but they do not keep the loan on their books.\nSo they essentially make a spread or arbitrage, if you will, including fees, on the sale of that loan. That gain on loan sale (GOS) is measured as a percentage of their investment. For example, on page 61 of the annual report (actually page 88 of the actual document) you can see these margins.\nOn the fifth line down you can see that in 2020, Rocket made a 4.46% margin on its gain on sale revenue. This is now much over 25% higher than in 2018 when the GOS margin was 3.55%.\nBut the problem is that what drove this growth is lower interest rates, refinancing volume and people being stuck in their homes to remodel them. The opposite is starting to happen.\nRates are slowly rising, partly from pent-up inflationary demands throughout the whole economy. This could dramatically dampen the volume of mortgages that Rocket does, especially if refinancing dries up.\nMoreover, this will have a double whammy effect on the Rocket’s GOS margins. A portion of the gain of sale margin includes the value of the servicing rights that come along with the sale of a loan. So as volume dries up, its servicing loan revenue will also take a hit.\nLast year, servicing fee income (which you can seeon page 54), the next line down, was $1.074 billion, its third-largest revenue source (6.8%). There is no reason why GOS income and loan servicing income couldn’t fall back to 2019 levels.\nMarket Share Growth\nYou can see in the line on page 61 (actual 88 of the annual report) just above the GOS margin, that Rocket has had a huge increase in market share. In 2018 they produced 5.0% market share of all U.S. mortgage loan originations. Last year, that rose by 48% to 8.4%.\nThis is also likely to continue as people migrate to using Rocket and Quicken’s direct-to-consumer mortgage apps, etc.\nBut the good news is that as Rocket continues to pick up market share this can help to ameliorate any downturn in GOS and loan servicing revenue. That implies that more and more people will move away from mortgage brokers and/or use Rocket’s partners for their loans. However, if that market share growth falters and interest rates rise, there could be a massive hit on the company’s revenue\nWhat to Do With RKT Stock\nIt’s hard to forecast the earnings for this company. It all depends on your outlook for interest rates. Market share growth is important. But the bottom line is, if people don’t originate new loans with higher rates, RKT stock won’t launch off the pad.\nBy my calculations, give that public shareholders have just an 8% economic interest in the total earnings and equity, RKT stock trades for over 5.5 times book value. This is a very high ratio. Let buyers beware if interest rates were to rise.","news_type":1},"isVote":1,"tweetType":1,"viewCount":86,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
