Rocket Companies ( NYSE: RKT ) shares are falling nearly 10% in Thursday after-hours trading as investors weigh the company's poor third-quarter guidance following worse than feared Q2 results.
The company, which is known for its mortgage lending business Rocket Mortgage, sees closed loan volume of $23B-28B in Q3.
Net rate lock volume for Q3 is expected to be $23B-30B.
And Q3 gain on sale margins are targeted to be 2.50%-2.80%.
Looking at second-quarter earnings, Rocket's ( RKT ) adjusted EPS posted a loss of three cents compared with the consensus of a gain of two cents. That's down from $0.46 at June 30, 2021.
Q2 adjusted revenue of $1.13B also missed the average analyst estimate of $1.53B and dipped from $2.79B in the year ago period.
As the mortgage market experiences pressure from rising mortgage rates, "we reduced expenses by approximately $300 million during the second quarter and will continue to execute a prudent approach to cost management," said Treasurer and CFO Julie Booth. "We are also investing our capital into the Rocket engagement and services platforms to expand our client base, drive higher conversion, and lower our client acquisition cost, setting the foundation for our next stage of growth."
Q2 closed origination volume dropped to $34.5B from $83.8B a year ago.
Gain on sale margin of 2.92% in Q2 vs. 2.78% in Q2 2021.
Net rate lock volume was $29.4B at June 30, down from $83.6B at June 30, 2021.
Adjusted EBITDA for Q2 came in at a loss of $27M, compared with a gain of $1.3B a year ago.
Q2 net interest income of $36.5M compared with $22.3M in Q2 2021.
In July, Wells Fargo upgraded Rocket Companies to Overweight .
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Rocket Companies stock slides after disappointing Q3 guidance, Q2 miss