What is $23 Rocket (RKT) Is Pricing In?

Mortgage production outlook, is RKT overvalued, what do you need to know from here?

I get a lot of questions on this RKT.

Rocket is a rates-down call option, but at $23 the question is no longer whether the trade works, it’s whether the payoff has already been pulled forward. If you bought earlier and won, the decision now shouldn’t be emotional or philosophical. It should be mechanical.

At $23 a share and roughly a $65B market cap, RKT is already discounting a friendlier mortgage environment, including policy narratives coming out of Washington around GSE balance sheet expansion. The reason this matters is because the future is a function of arithmetic.

Rocket trades on revenue power rather than earnings because earnings compress and expand violently with mortgage rates and obscure what the business can actually produce. At a $65B market cap, the implied revenue run rate is mechanical. Valued at 7x sales, the stock implies about $9.3B of revenue. At 6x, it implies roughly $10.8B. At 5x, it implies about $13.0B, and even a conservative 4x multiple implies closer to $16.3B. However you frame the multiple, the center of gravity of the valuation sits around $10B to $13B of revenue, give or take.

The 2025 run rate is expected to be about $6.3B. Earlier in the year, analyst consensus for 2026 sat closer to $7.7B, but has since moved rapidly toward the $10.6B range. That estimate migration explains the move in the stock. The more important question is what level of mortgage production that revenue actually requires.

Revenue at RKT is a function of mortgage production and pull-through. Historically, Rocket converts roughly 3% to 5% of production into revenue once gain-on-sale economics, servicing value, and fees are included. Under that framework, $10.6B of 2026 revenue implies roughly $210B to $350B of annual mortgage production. $13.0B implies closer to $260B to $430B. Those outcomes require a mortgage market that is meaningfully larger and more active than today’s.

In Q3 2025, Rocket accounted for roughly 5% of total U.S. mortgage production across purchase and refinance. Scaling that share to the production implied above makes clear how much must change for the valuation to hold.

I’ve written about this so much, but if you want to learn more start here: RKT Deep Dive

Deutsche Bank’s mortgage balance by coupon data provides the cleanest bridge between rates and volume. Under that framework, the 6.5% to 7.0% bucket begins at roughly $1.36T. Applying a conservative assumption that only one third of that cohort remains refinanceable after time spent below 7% leaves about $452B, and applying a 60% participation rate yields roughly $271B of effective refinanceable principal. The 6.0% to 6.5% bucket contributes another $200B. The 5.5% to 6.0% bucket adds about $316B. The 5.0% to 5.5% bucket adds roughly $407B. As rates move lower, these buckets stack. At 6.0%, the effective pool is about $471B. At 5.5%, it grows to roughly $787B. At 5.0%, it approaches $1.19T.

When those revenue levels are mapped back to the refinanceable pools above, the implied rate environment becomes clear. A 6.5% mortgage world does not unlock enough volume to support the revenue embedded in the stock. A 6.0% environment begins to approach it, but leaves little margin for error unless RKT really does grow market share. Around 5.5%, the assumptions align cleanly with $10B to $13B of revenue if Rocket converts a reasonable share of the pool, and may be low if they take share. And at 5.0%, the implied revenue is no longer stretched.

From here, the trade works only if rates continue to move. Lower long rates or tighter mortgage spreads are required to justify what is already embedded in the price. At $23 and a $65B market cap, Rocket is being priced as if mortgage rates drift toward roughly 5.5%. Investors are pulling forward this next 50bps of mortgage rate moves, as reflexive stories like to do.

I’m also watching other names that sit along the same fault line, LendingTree (TREE), loanDepot (LDI), and Onity (ONIT), each with different balance sheets, different sensitivities, and different ways of expressing the same macro bet. They all respond to the same force, which is not management quality or product design, but the direction of long rates. There’s also United Wholesale Mortgage (UWMC) and PennyMac (PFSI), both of which have been flying. And also Figure (FIGR) on the HELOC side.

Rocket remains one of the cleanest rates-down call options in the market, but no one actually knows where rates are going next. Economists actually are really bad at this, as the data from FRED shows. A 47% accuracy percentage on the 10-Year Treasury would quite literally bankrupt you if projected onto the world of money management or sports gambling.

But for RKT, if you believe a run-it-hot policy mix pushes long rates higher and steepens the curve, this setup becomes a very good short. If you believe growth slows, inflation cools, and mortgage rates drift lower, this trade makes a ton of sense. This one is fun because it triggers the boomer investor type. The stock does not reward certainty or today. It rewards being on the right side of a macro tomorrow that’s still unresolved.

Until next time,

Victaurs