Will Rocket Companies Launch On Earnings?

When Rocket Companies Inc RKT reported fourth-quarter earnings on Feb. 25, shares soon hit the moon.

Rocket Companies reported a 162% year-over-year increase in revenues of $4.8 billion, beating the Street’s estimate of $3.9 billion. Earnings per share of $1.14 beat the estimate of 87 cents.

Rocket Companies also announced a surprise special dividend of $1.11 per share that was paid to all shareholders as of March 9.

In the three days following Rocket’s report, shares skyrocketed 116% to an all-time high of $43, partly due to the WallStreetBets community piling into the stock.

Like many of the other stock targets in the community, such as GameStop Corporation GME, the parabolic rise was followed by a plummeting fall, and shares of Rocket Companies are down almost 50% from that $43 high.

Could Rocket Companies pull off another big surprise when it reports earnings Wednesday after the closing bell?

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The Rocket Companies Chart: On Monday morning, Rocket Companies opened on resistance at $22.65 and rejected it. The stock is also trading slightly below the eight-day exponential moving average and the 21-day EMA, with the eight-day EMA trending below the 21-day EMA, both of which are bearish indicators.

The stock has spent the last 32 trading days near the $23 level, trading in a sideways pattern, with a lack of any bullish or bearish bias. Rocket Companies has had low trading volume over the past few months, which shows there's both a lack of buyers and sellers of the stock. This indicates news, or earnings, could bring in volume to force the stock to choose a direction.

Bulls want to see bullish volume come into the stock prior to or directly after the company releases its earnings report. If the stock can regain $22.65, it has room to move up to $26.70 before bumping into another resistance level.

Bears want to see large bear volume enter after Rocket Companies releases earnings to push the stock down towards the $19 level.

RKT Price Action: Shares of Rocket Companies trade around $22.40 at publication time.