Second GameStop?…US Lending Company Stock Soars 71% in One Day

Rocket Company Targeted by Hedge Funds for Short Selling
'WallStreetBets' Retail Investors Buy Stocks in Large Volumes

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] The GameStop saga, which gained attention in the U.S. as a showdown between retail investors and short-selling institutional investors, appears to be resurfacing.

On the 2nd (local time), shares of online mortgage company Rocket Company surged 71.2% from the previous close to close at $41.6 per share on the New York Stock Exchange. This is the highest price since its initial public offering (IPO) in August last year.

Despite no significant positive news or related announcements that day, the sharp rise in Rocket Company's stock price seems to be linked to the online community Reddit's discussion board "WallStreetBets," the epicenter of the GameStop incident.

CNBC reported that many posts encouraging the purchase of Rocket Company shares were posted on the WallStreetBets board. One user posted, "I went all in with $1.7 million (about 1.9 billion KRW)," which received over 1,700 replies.

Rocket Company has recently become a target of hedge funds' short selling, drawing comparisons to the GameStop incident. According to financial information provider FactSet, short interest in the company approaches 40% of total shares, placing it among the top stocks most heavily shorted by hedge funds.

John Nazarian, co-founder of securities firm Market Rebellion, said, "Another battle between retail investors and hedge funds has begun after the GameStop incident," adding, "It appears that WallStreetBets once again led the retail investors' buying."

Previously, GameStop stock was also a major target of hedge funds' concentrated short selling. In response, retail investors collectively bought shares, causing GameStop to surge over 1,500% in two weeks.

Meanwhile, the New York Stock Exchange showed signs of hesitation due to weakness in major tech stocks that day.

The Dow Jones Industrial Average closed down 0.46% (143.99 points) at 31,391.52, the Standard & Poor's (S&P) 500 index fell 0.81% (31.53 points) to 3,870.29, and the tech-heavy Nasdaq index dropped 1.69% (230.04 points) to 13,358.79.

Apple and Facebook each fell more than 2%, while Tesla declined 4.5%, breaking below the $700 per share level.