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Rocket Companies (RKT) has gone from being a beaten-down, rate-sensitive mortgage name to one of the market’s favorite housing recovery trades. Over the last 12 months, the stock has climbed roughly 125% to about $23.44, riding a powerful narrative around AI-enabled efficiency, strategic acquisitions, and a “homeownership platform” story rather than just a pure-play originator.

In our latest deep research, we think the reality is more complicated. The business is clearly stronger and more diversified than it was at the trough of the cycle. But at this price, we see much of that improvement already reflected in the valuation—while leverage, integration risk, and macro sensitivity still loom large.

We rate the stock POTENTIAL SELL, with a base-case value around $22, a bull case near $30, and a bear case closer to $14. Our trim level is $26+, and we’d only get interested on the long side again closer to $16 unless execution meaningfully outperforms expectations.

If you’re trying to decide whether to buy, hold, or trim RKT heading into 2026–27, the key question is simple:

Is this a durable compounder, or a highly leveraged call option on the mortgage cycle that the market is already pricing for success?

As we’ll show, the answer depends on your confidence in management’s ability to deliver big synergies from Redfin and Mr. Cooper, and to turn Rocket’s AI investments into hard cost-per-loan and margin improvements—fast.

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Rocket Companies today: more than a mortgage originator

Rocket has spent the last several years transforming itself from a monoline, transaction-driven lender into something much broader.

According to the company’s own communications, Rocket now runs a nationwide, technology-driven mortgage origination and servicing platform alongside real estate brokerage (Redfin, Rocket Homes), title and closing services, and personal finance tools like Rocket Money and Rocket Loans, aiming for an AI-enabled “search-to-servicing” experience from home search through owning and refinancing your home.Rocket IR, Oct 2025, Third Quarter 2025 Results

The most important strategic moves over the last 18–24 months include:

Acquiring Redfin

Rocket wants to plug Redfin’s home search traffic and agent network into its origination engine, creating a closed-loop purchase funnel and lifting attach rates.Rocket IR, Mar 2025, Redfin acquisition announcement

Merging with Mr. Cooper

Combined, Rocket and Mr. Cooper will service around $2.1 trillion in mortgages across roughly 10 million borrowers, with management targeting about $400M in cost synergies and $100M in revenue synergies by 2027.FT, Mar 2025

The thesis: raise servicing recapture on a much bigger base and spread technology costs over more loans.

Scaling AI platforms (Rocket Logic, Pathfinder, Navigator, Synopsis)

These tools are already cutting “touches per loan” and closing times by roughly 25%, while lifting banker capacity by 54%, resulting in an estimated $40M of 2024 efficiency gains.Rocket IR, Apr 2024, Rocket Logic AI

Through 2024–25, Rocket’s adjusted profitability has rebounded sharply. Adjusted EBITDA jumped from about $67M in 2023 to ~$862M in 2024, and net income swung from a $390M loss to a $636M profit, helped by both volume recovery and AI-enabled efficiencies.Panabee, Mar 2025, Q4 2024 results

But the capital structure has changed even more dramatically.

In 2025, Rocket collapsed its former Up‑C structure, issued $4B of 6%+ senior notes, expanded total debt and funding facilities by more than 50%, and closed the Redfin and Mr. Cooper deals, materially increasing financial leverage while embedding synergy delivery into the equity story.Rocket IR, Jun 2025, senior notes pricing

That combination—stronger platform, heavier balance sheet—is at the core of our thesis.

Is RKT stock a buy in 2026—or priced for perfection?

At around $23.44 per share, Rocket sports a market cap near $66B. On trailing numbers, the stock trades at:

EV/EBITDA ~135x
Negative GAAP earnings (P/E about -39x)
Net leverage of 16.3x EBITDA
Interest coverage of only 0.87x[FMP]

We rarely see that combination—high multiples, negative GAAP earnings, and heavy leverage—as offering a comfortable margin of safety.

To be clear, the company is not liquidity-starved today. As of September 30, 2025, Rocket reported:

$33.6B in assets
$24.7B in liabilities
$8.85B of equity
$5.8B cash and equivalents
$7.4B in mortgage servicing rights (MSRs) at fair value
$10.5B of funding facilities
$8.5B of senior notes, with the weighted-average coupon rising from 3.59% to 4.61% after new 6.125–6.375% notes.Rocket IR, Oct 2025, Third Quarter 2025 Results

But MSRs are inherently rate-sensitive and model-dependent. They provide some asset backing, not a hard floor under the stock. And at this valuation, equity holders are effectively underwriting:

A smooth mortgage recovery
Timely and substantial synergies from Redfin and Mr. Cooper
Sustained AI-driven margin gains
And no major regulatory or funding mishaps

Our base case assigns:

50% probability to an outcome where industry originations grow mid-single digits annually, Rocket realizes about half of its synergy targets by 2027, and the stock is worth roughly $22.
30% probability to a bear case, implying around $14 per share, where refinance and purchase demand fail to accelerate meaningfully at ~6% rates, gain-on-sale margins compress, and GAAP losses and cash burn stay elevated.
20% probability to a bull case around $30, where integration and AI execution are both exceptional and Rocket captures most of the $500M+ synergy run rate by 2027 while restoring durable GAAP profitability.

From this lens, we see more downside than upside at current prices for investors who care about margins of safety rather than just playing the macro trade.

How is Rocket actually making money today?

To understand whether the premium multiple is warranted, we need to unpack Rocket’s real economic engine.

Revenue mechanics and business mix

Rocket’s revenues come primarily from two pillars:

1. Gain-on-sale from originations

The company originates mainly agency-conforming residential mortgages through direct-to-consumer and partner channels, funds them on warehouse and MSR facilities, and typically sells them into the secondary market within about 45 days.Rocket IR, Mar 2025, FY 2024 results
Gain-on-sale is influenced by origination fees, sale premiums, IRLC and loans-held-for-sale marks, hedging results, and the capitalization of MSRs.

2. Servicing fee income and MSR valuation changes

Once a loan is sold, Rocket usually retains the servicing rights, collecting recurring servicing fees.
The value of MSRs depends on prepayment speeds, discount rates, and expected cash flows, meaning rate moves can drive non-cash gains or losses through the income statement.Rocket IR, Oct 2025, Third Quarter 2025 Results

Supplemental revenue comes from title, settlement, appraisal, brokerage, and personal finance fees. Fixed costs are dominated by technology, corporate overhead, and brand/marketing, while variable costs are mainly commissions, fulfillment labor, and funding interest.Rocket IR, Mar 2025, FY 2024 results

AI automation is specifically targeted at those variable components—reducing touches per loan, accelerating processing, and boosting throughput at relatively stable headcounts.Rocket IR, Apr 2024, Rocket Logic AI

Recent operating performance

Q3 2025 gives a good snapshot of where Rocket stands coming out of the trough:

Originations: $32.4B (+14% YoY)
Net rate locks: $35.8B (+20% YoY)
Total revenue: $1.79B
Operating income: $43.8M
GAAP net loss: $(123.9)M (EPS $(0.72))
Adjusted EBITDA: $349.3MRocket IR, Oct 2025, Third Quarter 2025 Results

For the first nine months of 2025:

Originations: $83.1B
Net loss: $(302.2)M
Adjusted EBITDA: $690.1M
Direct to Consumer adjusted revenue: $3.2B
Partner Network adjusted revenue: $429.4M, pressured by weaker gain-on-sale margins.Rocket IR, Oct 2025, Third Quarter 2025 Results

The punchline: on an adjusted basis, Rocket is profitable again, with healthy EBITDA. On a GAAP basis, reported earnings are still negative, dragged by MSR marks, amortization, and deal-related costs.

Investors need to be explicit about which lens they’re using. Management compensation is heavily tied to adjusted metrics, which can underweight balance sheet resilience and true economic risk if you’re not careful.Rocket IR, Oct 2025, Third Quarter 2025 Results

For us, the combination of:

Negative GAAP earnings
High adjusted profitability
And very high leverage

means the company has less room for mistakes than the market seems to be pricing in.

If you want to look at how we systematically reconcile GAAP, non-GAAP, and leverage metrics across multiple mortgage and fintech names, you can see how our tooling works in practice here: Read our AI-powered value investing guide.

Use our deep research engine to compare RKT’s GAAP vs. non-GAAP metrics and leverage profile side by side with peers in minutes.

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Will Rocket’s AI and acquisitions actually deliver long-term growth?

The bull case for Rocket is compelling on paper:

AI-driven process automation that lowers cost per loan
Vertically integrated purchase funnel via Redfin and Rocket Homes
Massive servicing scale through Mr. Cooper, fueling recapture and cross-sell
A large, sticky customer base with 97% net client retention in 2024Rocket IR, Mar 2025, FY 2024 results

The question is whether this is primarily a market-share story, or a margin and earnings power story.

Evidence the moat is real

Several datapoints suggest Rocket has genuine, if still maturing, competitive advantages:

Data and scale

With a $593B+ servicing book pre-Mr. Cooper and ~5.87% national market share in 2024—nearly matching UWM’s 5.95%—Rocket is already a top-tier originator and servicer.National Mortgage News, Oct 2025

Adding Mr. Cooper’s servicing volume takes that to ~$2.1T and ~10M borrowers, feeding over 14 petabytes of data and 65M annual calls into its AI models.Rocket IR, Mar 2025, FY 2024 results

Operational benefits from AI

Rocket Logic and Pathfinder have reduced manual touches and closing times by ~25%, increased banker capacity by 54%, and cut guideline search time by 69%.Rocket IR, Apr 2024, Rocket Logic AI

Management estimated about $40M of efficiency gains in 2024 from these tools alone.Rocket IR, Mar 2025, FY 2024 results

Customer stickiness

A reported 97% net client retention rate in 2024, combined with strong recapture metrics, indicates meaningful switching costs once a borrower is in the Rocket ecosystem.Rocket IR, Mar 2025, FY 2024 results

Put together, these are not trivial advantages. They support Rocket’s effort to become the most vertically integrated, data-rich consumer housing platform in the U.S., as highlighted in recent coverage by outlets like Barron’s, Mar 2025 and Observer-Reporter, Aug 2025.

Where the thesis can break

But advantages are only useful if they translate into sustainable earnings and cash flow that justify today’s premium.

We see several critical execution risks:

1. Synergies may under-deliver or arrive late

Management is targeting $400M in cost and $100M in revenue synergies from Mr. Cooper, plus over $200M in run-rate synergies from Redfin by 2027.Rocket IR, Mar 2025, Redfin and Mr. Cooper deal announcements

If by year-end 2026 combined synergies are running below $250M pre-tax with no credible path to the original targets, our view is that the equity’s current premium will be hard to justify.

2. Margin pressure from competition

UWM and other low-cost providers can choose to compete aggressively on price, forcing Rocket to pass much of its AI-driven cost savings through to customers in the form of lower rates rather than retaining them in higher margins.Barron’s, Mar 2025

We’ve already seen that despite efficiency gains, gain-on-sale margins have been flat to down in 2024–25, suggesting the advantage is showing up more in throughput and share than in unit economics.Rocket IR, Jul 2025, Q2 2025 Results

3. Macro constraints on volume

The Mortgage Bankers Association expects only about 8% growth in U.S. single-family originations in 2026, not a “boom year.”MBA, Oct 2025, 2026 forecast

Meanwhile, around 69% of homeowners still hold sub-5% mortgages, meaning that even at ~6% rates, refi elasticity is limited and purchase demand is capped by affordability and inventory.AP, Jan 2026

Our view: Rocket’s strategic position is strong, and the AI work is real. But the stock price assumes a lot of that strength turns into hard financial outcomes, quickly, in a still-challenged housing market.

Margin of safety: what could go wrong?

For conservative value investors, the most important part of any thesis is the downside: how likely is permanent capital impairment, and what protects you?

Here, we think the margin of safety is thin.

Balance sheet risk and funding structure

Rocket’s leverage and funding stack introduce several key vulnerabilities:

Fixed interest burden: Around $8.5B in senior notes, including $4B at 6.1–6.4%, with net debt/EBITDA of 16.3x and interest coverage below 1x.Rocket IR, Oct 2025, Third Quarter 2025 Results[FMP]
Reliance on warehouse and MSR facilities, with covenants and cross-default provisions that could bite if MSR marks or volumes move the wrong way.
Complex capital allocation history, including a special $0.80/share dividend associated with the Up‑C collapse despite high leverage, which we interpret as management favoring shareholder optics over maximum deleveraging.Alphaminr, Jun 2025

We outline several downside boundary conditions where permanent capital impairment becomes likely:

1. Industry volumes undershoot forecast

If industry originations through 2026 come in below MBA and Fannie Mae forecasts and Rocket’s volume growth slows to low-single digits, with gain-on-sale margins under pressure, fixed interest on its debt may not be comfortably covered, forcing asset sales or dilution.MBA, Oct 2025 Fannie Mae, Mar 2025

2. Synergies materially delayed or under-realized

If by 2027 synergy run-rates are well below half of the $500M+ target, leverage would remain structurally high relative to earnings, leaving little room for error.

3. Regulatory or rating-agency stress

Any action that constrains Rocket’s warehouse lines or MSR facilities could trigger margin calls, tougher covenants, or even cross-defaults.Rocket IR, Oct 2025, Third Quarter 2025 Results

In those scenarios, the equity can quickly morph into a highly levered call option on future rate cycles, not a durable compounder.

We think that’s the real risk at current prices: you’re paying an upmarket multiple for a capital structure that behaves like a leveraged cyclical.

What is the market already pricing in?

Market sentiment has turned dramatically since mid-2025.

Recent coverage from outlets like TheSmartInvestor, Jan 2026 and Motley Fool, Dec 2025 broadly frames Rocket as:

A high-beta winner of a friendlier rate environment
A consolidator with $2.1T in servicing and a differentiated AI platform
A homeownership platform, not “just” a mortgage originator

At the same time, consensus ratings still cluster around Hold, with at least one prominent downgrade to Sell and several price targets below or only slightly above the stock’s recent trading range.Defense World, Nov 2025 Defense World, Sep 2025

From our reading of the narrative, the market is implicitly assuming that over the next 12–24 months:

Fed easing will convert into sustained growth in Rocket’s net locks and closed loans.AInvest, Sep 2025
Redfin and Mr. Cooper integrations will deliver visible cost-per-loan and servicing-margin improvements within 18–24 months.AInvest, Dec 2025
AI investments will translate into higher purchase share and better recapture, not fully competed away by rivals.
Housing policy and affordability will not structurally cap Rocket’s economics or spark adverse regulation.Barron’s, Jan 2026

We think those are realistic but optimistic assumptions. They can certainly play out—but they leave limited room for disappointment.

Key milestones and metrics for RKT investors to watch

Whether you’re long, short, or on the sidelines, there are specific, trackable milestones that will tell you if the thesis is working.

We break them into three timeframes.

Near-term (0–6 months)

Mr. Cooper closing and structure details

Watch for final regulatory clearance, any required note redemptions, and updated covenant terms around the 2030/2033 notes.FT, Mar 2025 Rocket IR, Jun 2025

Early Redfin synergies

Look for disclosure on:

Percent of Rocket originations sourced via Redfin channels
Uptake of Rocket Preferred Pricing
Any noted impact on margins from buydowns and credits.Rocket, Jul 2025, Redfin closing

Updated 2026 volume and margin guidance

Management’s commentary on how lower rates and the combined platform affect originations and gain-on-sale will be critical in resetting expectations.MBA, Oct 2025, 2026 forecast

Medium-term (6–18 months)

Synergy run-rate progress

We want to see tangible movement toward:

At least ~50% of Redfin’s targeted run-rate synergies by 2027
A clear path to Mr. Cooper’s $400M cost and $100M revenue synergies by 2027
Explicit improvements in cost-per-loan and opex-per-loan metrics.Rocket IR, Mar 2025, Redfin and Mr. Cooper announcements

Servicing recapture on the combined book

Mr. Cooper’s recapture historically trailed Rocket’s. We’ll be monitoring whether recapture and client retention on the combined portfolio trend toward Rocket’s legacy levels.WSJ, Mar 2025

AI impact on margins

Investors should look for margin bridges that attribute gains directly to AI efficiencies and show resilience in gain-on-sale despite competitive pricing.Rocket IR, Apr 2024, Rocket Logic AI

Longer-term (2–5 years)

Scale and share goals

Management has ambitions to nearly double purchase and refi market shares by 2027. Achieving anything close to that would go a long way toward supporting the current platform-premium valuation.Rocket IR, Mar 2025, Redfin acquisition

Sustained GAAP profitability and free cash flow across the cycle

We want to see Rocket generate consistent positive GAAP earnings and free cash flow, while gradually deleveraging even with 6%+ fixed interest on long-term notes.Rocket IR, Jun 2025, senior notes[FMP]

Diversification into more stable fee businesses

Growing Rocket Money, personal finance, and adjacent services into a meaningful, less rate-sensitive profit pool would reduce the company’s dependence on the mortgage cycle.Rocket IR, Oct 2025, Third Quarter 2025 Results

For active investors, these KPIs are where we’d anchor ongoing thesis checks and sizing decisions.

Our verdict: when does RKT make sense in a portfolio?

Pulling it all together, here’s how we’re thinking about Rocket from a practical portfolio standpoint.

Who might still want to own RKT here?

RKT can make sense at current levels for investors who:

Are comfortable underwriting macro and execution risk, and
Believe Rocket will deliver at least half of its $500M+ synergy targets by 2027, while
Expect the Fed and housing policy backdrop to remain broadly supportive of originations growth and servicing economics.

In that scenario, RKT is effectively a leveraged, high-beta play on a gradually improving mortgage cycle, with upside from AI and integration that could support a bull-case value near $30.

But position sizing and time horizon matter. We would treat it as a small, high-risk satellite position, not a core holding, even for investors with a constructive view.

When would we get more constructive?

We’d revisit our POTENTIAL SELL stance if one of two things happens:

1. Price resets closer to $16

At that level, much of the macro and execution optimism would be wrung out, making it easier to underwrite the name as an option on successful integration and AI execution.

2. Execution and deleveraging outpace expectations

For example:

Synergies above $250M pre-tax run-rate by mid-2026 with a credible path to full targets
Clear reductions in cost per loan and opex per loan attributable to AI
Interest coverage rising well above 1x on a GAAP basis, with visible deleveraging

If the company can deliver that while the share price remains roughly where it is, the risk/reward would shift toward neutral or even positive in our framework.

What are we doing now?

Given today’s pricing and fundamentals, our stance is:

Rating: POTENTIAL SELL
Trim above: $26
Attractive entry: $16
Re-assessment window: 6–12 months, keyed primarily to synergy progress, interest coverage, and gain-on-sale trajectory.

For existing holders with sizeable gains from much lower levels, we think trimming into strength above $26 and letting a smaller “house money” stake ride the upside case is a reasonable strategy.

For new capital, we’d rather wait for either better evidence of execution or a cheaper entry.

Before you buy, sell, or trim, generate a fresh, fully cited RKT report that incorporates the latest filings, deals, and industry data.

Run Deep Research on RKT →

Rocket Companies (RKT) Deep Research Report: Overvalued vs. Opportunity Heading Into 2027?