Rocket Companies Stock Sinks as High Mortgage Rates Hurt Results, Outlook | Global News Avenue

rocket company (click rateShares of the online financial platform plunged 10% on Wednesday, a day after it severely missed revenue forecasts and gave soft guidance as the housing market continues to be squeezed by high borrowing costs.

The mortgage provider’s revenue plunged 46% year over year to $647 million, about half of what analysts polled by Visible Alpha had expected. After adjustment Earnings per share (EPS) $0.08 is in line with expectations.

The revenue decline came despite Rocket’s net margin locked volume jumping 43% to $29.8 billion. Sales profit margin increased 2 Basis points (bps) to 2.78%. However, this figure was down from 2.99% in the second quarter.

CEO calls housing market ‘challenging’

“Over the past few months, the market has thrown our industry just about every curveball imaginable,” Chief Executive Officer (CEO) Varun Krishna said on the company’s earnings call, according to a transcript provided by AlphaSense. “As inflation eases, the Fed cuts interest rates for the first time in four years. But interestingly, when the Fed cuts rates, mortgage rates don’t follow suit.”

Krishna called the housing market “challenging.”

Chief Financial Officer (CFO) Brian Brown added: “We expect the mortgage market to be smaller in the fourth quarter than in the third quarter.”

The company expects current quarter revenue to be between $1.05 billion and $1.2 billion. Visible Alpha estimates $1.18 billion.

The news sent Rocket’s stock price into negative territory this year.