Acquisitions may be ahead for Rocket Companies

Ahead of his firm’s NYSE debut Thursday, Dan Gilbert told CNBC that Rocket Companies may make acquisitions to further leverage its mortgage-lending technology. 

“We want to use our stock as currency and potentially acquire more fintech organizations and put them in the mold,” said Gilbert, chairman of Rocket Companies, which he founded in 1985. 

Rocket Companies closed up 19.5% Thursday to $21.51 per share. The Detroit-based firm sold 100 million shares at $18 each in its initial public offering, which came below targets of 150 million shares in a range of $20-$22.

It suggested investors valued Rocket Companies — the largest U.S. mortgage lender and parent of Quicken Loans — more as a financial services firm and less as a technology firm, Reuters reported Wednesday. 

“That’s one of the big points of contention. We think we’re a technology company that happens to do home loans,” the billionaire Gilbert said on “Squawk Box.”

Quicken Loans’ Rocket Mortgage is known for its fast, online-based mortgage application and refinancing services. In addition to its core home loans business, Rocket Companies also has a personal and auto financing segment. It also owns sites such as ForSaleByOwner.com and LowerMyBills.com

Gilbert touted Rocket Companies’ ability to develop the technology to power Rocket Mortgages as a reason that acquisitions could be on the horizon. 

“You’re doing mortgages in 3,000 counties and 50 states. Each one is different. Each one has got to be fleshed out, each part of it. Once you do the mortgage electronically, or digitally, any other kind of transaction is less cumbersome,” he said.

“We figure that with the public stock, if we go out and acquire some businesses, we can help them really achieve things, because the mortgage was the hardest,” continued Gilbert, who also owns the NBA’s Cleveland Cavaliers. 

In its S-1 filing with the Securities and Exchange Commission, Rocket Companies reported net revenues of $5.1 billion in 2019 with profits of $893.8 million. The company also said in the filing that it saw record mortgage origination in March, April, May and June of this year, despite the impacts of the coronavirus pandemic on the economy. 

“This month, we’re going to close 100,000 mortgages across 50 states, so we know that tech platform is there. We know how powerful it is, and we’ll just continue to demonstrate that to the market,” said Jay Farner, the CEO of Rocket Companies, later on CNBC’s “Squawk Alley.”

Farner said it has been a strong year for Rocket Companies and suggested a dividend for shareholders could be on the table, too. However, he said they did not have a timetable on when that may be offered, saying “our first priority is always investing back in our company.” 

“But when you have a year like we’re experiencing now where our current EBITDA margins are north of 70% and we’re looking at volumes going from $15 billion to now $30 billion, you can run rate that out,” Farner said. “It’s going to be an amazing year for us, and so we just want to be keeping all our options open and dividend could be a real option for our shareholders.”