Rocket Companies (RKT) Plunges 3.90% as FTC Lawsuit, Housing Slump Weigh on Shares

Rocket Companies (RKT) fell 3.90% on Monday, marking its fourth consecutive day of declines, with a cumulative drop of 16.90% over the period. The stock hit an intraday low not seen since August 2025, with a single-day plunge of 6.43%, reflecting growing investor unease amid a confluence of legal, financial, and market pressures.

The Federal Trade Commission’s antitrust lawsuit against Redfin, Rocket’s real estate platform, has emerged as a key driver of the stock’s volatility. The case alleges a restrictive agreement between Redfin and Zillow that suppressed competitive dynamics in rental housing advertising. Such legal scrutiny raises operational and financial risks for Rocket, potentially limiting Redfin’s market agility and exposing the company to penalties or regulatory constraints.

Compounding these challenges, the housing market remains subdued despite falling mortgage rates. Redfin reported stagnant pending home sales and flat new listings, signaling weak buyer demand and a lack of momentum in the sector. This has directly impacted Rocket’s core mortgage services, as prolonged market inertia curtails transaction volumes and revenue potential. The disconnect between lower borrowing costs and buyer activity underscores broader economic uncertainties.

Financial metrics further highlight Rocket’s struggles. A recent net loss of $1.78 million and a three-year revenue decline of 35.21% underscore deteriorating profitability. Elevated selling and administrative expenses, coupled with a high price-to-sales ratio of 14.45, reveal operational inefficiencies and overreliance on market conditions. The company’s leverage and debt practices also raise concerns about long-term sustainability, particularly in a low-growth environment.

Investor sentiment has turned cautious, with rapid price swings reflecting uncertainty over the FTC case and housing market outlook. The stock’s recent drop from $19.59 to $16.94 within a week illustrates market fragility, as stakeholders reassess Rocket’s strategic and financial resilience. A price-to-book ratio of 5.03 suggests a mixed valuation of the company’s intangible assets versus its tangible value, amplifying risk perceptions.

Looking ahead, Rocket must navigate a complex landscape. Resolving the FTC lawsuit and stabilizing financial performance will be critical to restoring investor confidence. Strategic recalibration, including cost management and regulatory compliance, will determine its ability to adapt to a stagnant housing market. Until these challenges are addressed, the stock is likely to remain vulnerable to external shocks and shifting market sentiment.