In this news, we discuss the UWM leads mortgage rally after Rocket-driven short squeeze.
(Tech News Update) – Mortgage lender UWM Holdings Corp surged more than 30% in early trade on Wednesday to lead a second day of rally in stocks from the sector that gained attention following a short-squeeze in Rocket Companies.
UWM, which last year went public through a $16-billion deal with a blank-check firm, was one of the most talked about stocks on trading focused social media site Stocktwits, with message volume on the company more than doubling.
The traffic indicates that it could become the preferred mortgage stock for many online retail traders, replacing Rocket, whose market capitalization rose by more than $34 billion to $82.6 billion in the previous session.
Shares in UWM rose to $12, while Rocket, the parent of mortgage lender Quicken Loans, gave up all its early gains when markets opened. It was down nearly 23% when trading resumed after a brief halt due to volatility.
There has been heavy short interest in Rocket’s shares this week, setting them up for a short squeeze on Tuesday. A short squeeze happens when investors betting against a company’s shares are forced to unwind their positions after a rally to avoid further losses.
Last session’s surge in Rocket’s shares is estimated to have inflicted losses of $813 million on short-sellers, data from financial analytics firm Ortex showed.
Rocket’s management has taken short-sellers of the stock head on by recently announcing a $1.11 per share special dividend.
The investor appetite toward mortgage vendors this month is a stark contrast to their recent outlook on the sector. A slew of canceled initial public offerings in recent months pointed to fears that the U.S. housing market may have reached a peak.
Reporting by Aaron Saldanha in Bengaluru, Additonal reporting by Lance Tupper in New York; Editing by Anirban Sen and Arun Koyyur
(This story has not been edited by Bollyinside staff and is auto-generated from a syndicated feed.)