Photo: Rocket Company
Photo: Rocket Company

Rocket Companies shares skyrocket, reaching a record high as highly shorted stock gains traction among social media investors

Rocket Companies (RKT), the consumer financial tech company and parent of Quicken Loans and Rocket Mortgage, soared to a record high on Tuesday, triggering a trading halt as the heavily shorted stock was cited as a possible target of investors on social media platforms like Reddit.

Shares were halted for volatility on the New York Stock Exchange between 2:10 and 2:15 E.T. on Thursday, after rising as much as 74% to a record high of $42.17 apiece.

"RKT’s stock price and short selling activity is reminiscent of another recent high flying meme stock – GameStop Inc (GME). Both stocks saw their share price spike due to high retail buying interest (predominantly due to significant social media activity) and an options based gamma squeeze," S3 Analytics said in a note Tuesday. "Both stocks also had/have relatively high short interest and high stock borrow rates which imply strong short selling demand and very limited stock borrow supply."

Stock futures open slightly higher

Stock futures opened slightly higher Tuesday evening after sliding during the regular session, as investors weighed optimism over widespread post-pandemic business reopenings against concerns over economic overheating.

Contracts on the S&P 500 ticked up. Nasdaq futures edged higher after the index closed lower by 1.7% earlier, with technology stocks lagging amid a rotation to cyclical shares poised to benefit from easing stay-in-place orders. Airlines, cruse lines and hotel stocks increased on Tuesday, and held onto gains during the overnight session.

Investors this week have fixed their gaze on the next several months, when vaccine-enabled reopenings will help boost service-centric companies heavily beaten down last year. President Joe Biden said Tuesday that the U.S. now expects to have enoughCOVID-19 vaccines for all adults who want one by the end of May, pulling forward that target by two full months from the government's previous forecast. The drugmaker Merck (MRK) is set to help produce Johnson & Johnson's (JNJ) single-dose COVID-19 vaccine that was authorized over this past weekend, which would help speed the pace of inoculations in the U.S.

Nasdaq, S&P 500 Retreat

The Nasdaq was the worst performing major index, falling around 1.3%. E-commerce stock MercadoLibre (MELI) was the biggest loser, giving up around 5%.

The S&P 500 also lost ground, giving up around 0.7%. Enphase Energy (ENPH) was the biggest laggard, slipping almost 7%.

Volume was mixed compared to the same time Monday. It fell around 5% on the Nasdaq and rose almost 5% on the NYSE.

The S&P sectors were coming under pressure, with most posting losses. Only materials and energy were in the green.

Small caps were also being battered by the bears. The Russell 2000 fell 1.3%.

Boeing Stock Stalls As Dow Jones Falls

The Dow Jones Industrial Average was the best performing major index, falling around 0.3%.

Boeing gave up early gains, reversing around 0.5%. This caused it to lose ground on a cup base buy point of 244.18.

It comes a day after Boeing stock was the standout component, gaining almost 6%. However, its Composite Rating highlights the challenges ahead, as it has slumped to a dismal 12 out of 99.

Dow (DOW) was the top performer, rising almost 2%. Caterpillar (CAT) was the biggest loser, falling almost 2%.

Nio Stock Sinks; Tesla Stock Stalls

Chinese EV stock Nio was down almost 10% after the firm posted disappointing results. The firm warned the global chip shortage will slow production.

The China electric vehicle maker reported a Q4 loss of 14 cents a share on $1.02 billion in revenue. Analysts expected a 7-cent loss on $1.01 in sales.

A previous breakout from a cup base with a 57.30 buy point failed, and the stock is now well below this entry point.

IBD Leaderboard stock Tesla also fell, surrendering around 2%. Last week, TSLA fell more than 13%. It remains marooned beneath its 10-week line.

Tesla stock has also bee hit been affected by the chip shortage, which caused it to reportedly halt production of its Model 3 sedan at its Fremont, Calif., factory. The stock remains well extended from a 466 buy point of a cup with handle.

GM stock bucked the trend, rising almost 3%. This helped move further away from its 50-day moving average. It broke out from a cup base Jan. 12 on positive EV news. However, it has given up ground after a surge.

General Motors was Monday's IBD Stock Of The Day due to its bullish rebound from its 10-week moving average. This set up a potential buying opportunity. It also retook its 21-day line and a trend line.

Kohl's and Abercrombie & Fitch top 4Q earnings estimates as apparel retailers bounce back after difficult 2020

Kohl's (KSS) and Abercrombie & Fitch (ANF) each reported fourth-quarter earnings Tuesday morning that beat consensus expectations, as the consumer shift from service-based to goods-based spending helped lift results at the apparel retailers.

Kohl's adjusted earnings of $2.22 per share grew from $1.99 over last year, and easily topped estimates for 98 cents per share, based on Bloomberg consensus data. More prudent cost-cutting helped the company increase its profitability despite a drop in revenue, with sales down 10% to $5.88 billion during the three months ending in January. For the full year 2021, net sales are expected to return to growth in the mid-teens percentage range over the prior year, and earnings per share will come in between $2.45 and $2.95, the company said. Shares rose slightly in early trading.

Meanwhile, Abercrombie & Fitch posted adjusted earnings of $1.50 per share, also growing over last year and exceeding the $1.24 consensus estimate. Net sales decreased 5% to $1.12 billion, matching estimates. Like many other retailers, Abercrombie saw another jump in digital sales, with e-commerce revenue rising by 34%. Shares jumped more than 2% in early trading.

Bitcoin Retreats

Stock price today (March 4): Rocket Company market shares skyrocket, reminiscent of

Bitcoin was holding fairly steady, though it was off 24-hour highs. It currently sits around $48,500, according to CoinDesk. The price of Bitcoin is still well short of the record high of $58,332, which it reached Feb. 21.

Grayscale Bitcoin Trust ended up giving up most of its early session gains, though it was still up around 0.4%. GBTC stock plunged 23.8% last week, but is still holding above its 10-week moving average.

What is meme?

A meme is a virally transmitted image embellished with text, usually sharing pointed commentary on cultural symbols, social ideas, or current events. A meme is typically a photo or video, although sometimes it can be a block of text. When a meme resonates with many people, it's spread via social platforms like Twitter, Facebook, Instagram, texting, and more. The more a meme is spread, the greater the cultural influence it has.

Here's a deeper look into what exactly a meme is, the different types of memes, and some meme examples.

Evolutionary biologist Richard Dawkins coined the word "meme" (rhymes with "team") in his bestselling 1976 book The Selfish Gene. While he had no idea of its future internet-related context, he used the word meme to describe an idea, behavior, or style that rapidly spreads from person to person in a culture. In his book, he likened a meme's spread to that of a virus. The word meme came from the Greek word mimeme, which means imitated thing.

Decades later, Dawkins supported the appropriation of the word meme into the digital world. He said that the new meaning isn't that far from his original explanation.

From broker notes to memes: how the stock market went viral

Stockholm — “Stocks only go up,” concludes a video montage of televangelists, dancing Ghanaian pallbearers, and Donald Trump’s personal pastor repeatedly saying she can hear the “sound of victory.”

The tongue-in-cheek meme, designed to characterize bullish stock market sentiment when news of Pfizer BioNTech’s successful COVID-19 vaccine broke, has been viewed more than 1 million times on Instagram and Twitter.

Far more wide-reaching than broker research notes, memes have become central to a new form of financial literacy – or illiteracy, depending on your viewpoint – behind the frenzied boom in retail trading of cryptocurrencies or stocks on platforms like Robinhood.

Using images from pop culture overlaid with market commentary, they’re being praised – and vilified – for making trading entertaining and game-like.

“So many more people are getting into the stock market through Robinhood and bitcoin, so everyone is now in on the jokes about flipping your stimulus money or Fed intervention sending stocks up,” said Lit, the moniker of the man behind Litquidity, which produced the “sound of victory” meme.

He set Litquidity up four years ago, using memes to entertain young finance workers, but its Instagram following – the “litfam” – has doubled to around half a million since last March.

Lit, who works in finance and prefers not to go by his real name, is now making money from his sideline, attracting sponsorship from companies eager to reach a young audience with disposable income.

Litquidity’s recent 30 under 30 list of young people in finance – playing on the more established Forbes magazine’s annual ranking – was sponsored by trading apps and an eye wear brand. Lit has also posted a meme in partnership with payments app Revolut.

For meme sponsors the potential audience was already huge but it has grown even further in the past few days.

Website Reddit’s wallstreetbets page, which this week picked the pockets of seasoned short sellers by encouraging a buying frenzy on GameStop, added two million followers in the last 48 hours.

On video sharing app TikTok, where 85% of users are under 35, there have been 5 billion and 1.4 billion views for #sidehustle and #finance, respectively.

Irish day trader Damian McVeigh said that social media content and memes helped pique his interest in finance.

“I always thought it was dry, but internet content livens it up. There’s less of a barrier because of it,” McVeigh – a quantity surveyor by trade – said.

This time last year McVeigh had limited interest in financial markets, but, after getting bored during lockdown, he now has a portfolio worth a quarter of his annual salary and a YouTube channel where he blogs about companies.

Trading app eToro grew its user base by around a third in 2020, with $1.5 billion invested on the platform, a 400% increase from 2019 as stuck-at-home punters splashed their cash.

However, critics say turning finance into entertainment can create a carnival atmosphere which promotes risk-taking by inexperienced traders.

“Memes or videos of people waving dollars around are a similar culture expression of joy as risk,” said Dr Cesar Albarran-Torres, a media lecturer at Swinburne University of Technology in Australia.

Albarran-Torres said internet chatter encourages uninitiated people to gamble on the stock market, adding: “It makes money into a video game.”

However, many social media users see the retail traders as worthy underdogs in a David v Goliath battle against established hedge funds who are used to getting their own way.

Twitter personality Liz Franczak tweeted: “the free market is when you stop reddit from trading meme options,” in reference to trading halts on stocks popular with Reddit’s wallstreetbets.

Top behavioral economist Professor Colin Camerer told Reuters that the three million strong Reddit traders “are all in a stadium cheering together.”

“Social media makes it possible to coordinate these mass actions,” Camerer said, adding that it will be interesting to see how the dynamics of this new financial phenomenon play out when some individuals in the group want to sell.

Regulation is another potential threat.

Lit, however, distances himself from accounts which recommend buying individual stocks. He says his role as meme creator is more akin to an observer or satirist.

“I like to caution at times when things seem very exuberant, to signal that this might not end well,” he added.

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