Dan Gilbert’s Rocket Companies IPO raises $1.8 billion, launches trading on Wall Street

Susan Tompor | USA Today | Aug 6th, 2020

Detroit billionaire Dan Gilbert celebrated his $1.8 billion Rocket Companies IPO Thursday by talking up the possibility of acquiring more financial-technology companies down the road.

“We want to use our stock as currency and potentially acquire more fin-tech organizations and put them in the vault,” Gilbert said on CNBC. “We’re excited about it.”

Rocket stock began trading on the New York Stock Exchange Thursday around 11 a.m,. opening at the IPO price of $18 a share. The stock was gaining ground and trading around $18.65 a share shortly after 11:30 a.m. In early trading, the stock swung from a range of $17.50 a share to $18.91 a share.

IPOs are far from sure bets in general.

“We are not huge fans of IPOs because of the psychological aspects of investing,” said Sam Huszczo, a chartered financial analyst in Southfield, Michigan. “Storytelling is one of the most powerful ways to sell any product and IPOs almost always come pre-loaded with a phenomenal story behind them, which can help inflate prices,”

One study, he said, suggested that the average IPO has underperformed its relative market benchmark by 21% per year in the first three years after its release.

Huszczo maintains that an IPO stock can, over time, lag by comparison because the stock price of the IPO gets inflated amid all the excitement of the initial offering.

“Pandemics and IPOs were not something that we had expected to see together, but who would have predicted that many Americans would have used their stimulus checks to invest in the stock market?” he said.