What's Driving The Rally In Rocket Competitor UWM Holdings?

A Rocket Companies competitor's stock was continuing to trade higher Wednesday as retail traders and CNBC's Jim Cramer keyed in on its short interest.  

What Happened: Shares of Rocket Companies Inc RKT gained more than 70% Tuesday. The move was contributed to several factors like the Detroit mortgage company's recent earnings, a short squeeze and increased interest from the Wallstreetbets crowd.

Pontiac, Michigan-based rival UWM Holdings Corp UWMC also saw a surge in share price Tuesday as a sympathy play to Rocket and the strength of the company’s earnings.

UWM Holdings announced it has been included in the preliminary list of recent IPOs that could be added to the Russell 1000 and Russell 3000 indexes, which could have also played into Tuesday’s share price rise.

Shares could be moving higher Wednesday as investors look at UWM Holdings' high short interest.

“Why is there a 14% short position in UWMC? I know it is not as consistent as Rocket, but that does seem high,” Jim Cramer tweeted late Tuesday.

Related Link: Why This UWM Holdings Analyst Is Bullish Despite Potential Mortgage Slowdown

Why It’s Important: UWM Holdings Corp went public in the largest SPAC deal of 2020.

After the merger, shares of UWM Holdings fell from over $13 down to a low of $7.24. After a SPAC merger is completed, investors are no longer allowed to redeem shares at the $10 plus interest net asset value.

With the current rise in UWM’s share price, the company is valued closer to the $16 billion that was assigned from its SPAC deal announcement.

RKT, UWMC Price Action: Shares of Rocket Companies were down 20.05% to $33.26 at last check Wednesday. 

UWM Holdings shares were trading 9.77% higher at $10. 

Shares of UWMC were up over 30% in the premarket session.