The Wallstreetbets community on Reddit is back at their antics once again. Their target this time, Rocket Companies Inc (NYSE: RKT). Shares of Rocket were trading as low as USD 19 on Monday, as RBC capital markets projected a price target of USD 30 for the stock. Rocket had heavy short interest, roughly 46% of its share float, making it a prime target for Reddit users. Short sellers in today’s market must take caution to the fact that heavily shorted stocks could more than likely become targets for short squeezes. Tuesday, shares of Rocket skyrocketed 71% to as high as USD 41.99, with trading volume at one point reaching 49 million shares. As Rocket has become one of the top trending stocks on Wallstreetbets, some users have started to post about massive returns. “$181,840 gain in 4 hours from $RKT. Time to give my wife that wedding she always wanted.”, one user exclaimed.
After the Reddit fueled rally shares of Rocket are down 28% from its peak on Tuesday to roughly USD 33. RBC Capital Markets maintained its USD 30 price target implying that after “abnormal volatility” the price eventually would return to reality. JPMorgan on the other hand projects a price target of USD 20 for Rocket, suggesting there will be more than a 50% decline from its peak on Tuesday. “In light of the sharp rise in share prices, we believe fundamental investors should take profits,” said Richard Shane, JPMorgan’s equity strategist. He went on and stated, “While similar high velocity, high volatility events have created sustained speculative opportunities, we believe core, long-term investors will be able to rebuild positions at lower price levels.” While people are taking advantage of these social media driven opportunities, investors must beware the fact that in the end there will always be a race to sell and take profits as early as possible.