The stock market kept investors on edge Friday, although the tone was more mixed than down by the late morning. After being smacked down hard, the Nasdaq Composite (NASDAQINDEX:^IXIC) managed to bounce back somewhat from its recent losses. However, other major market benchmarks were flat to lower on the day, and investors seem nervous about crosscurrents in the economy that are calling into question central banks' ability to manage monetary policy effectively. As of 11:30 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 340 points to 31,062. The S&P 500 (SNPINDEX:^GSPC) eased lower by 2 points to 3,828, while the Nasdaq Composite (NASDAQINDEX:^IXIC) rose 137 points to 13,256.
It's been a great season for IPOs, especially given the big run higher for the stock market over the past year. Some newly public stocks have seen big reversals as the market started getting choppier. But today, both Rocket Companies (NYSE:RKT) and Airbnb (NASDAQ:ABNB) shot upward on positive news about their respective businesses and their prospects.
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Rocket shows shareholders the money
Shares of Rocket were higher by 13% on Friday morning. The mortgage specialist continued to see impressive growth, and it rewarded its shareholders with some unexpected cash.
Fourth-quarter revenue soared 144% from year-earlier levels, buoyed by massive numbers of loan originations. Adjusted net income more than quadrupled, with the company closing more than $107 billion in loans during the quarter and setting a record. In addition to its core mortgage business, Rocket reported strong growth in its automotive marketplace and its Rocket Homes digital i-selling platform. Rocket had 153 million people visit its site in 2020, up more than 60% from 2019, and the company boasted strong retention rates above 90%.
Rocket did so well that it announced a special dividend of $1.11 per share to be paid in March. Management said that its capital generation was so strong that it had more than enough to fully reinvest into its business. All by itself, that special dividend works out to nearly a 5% dividend yield -- putting the lie to the idea that high-growth IPO stocks can't be dividend payers as well.
Rocket came public to great fanfare, but its stock has been on a roller-coaster ride. Bullish investors hope that the quarterly news will finally put Rocket stock into orbit once and for all.
Airbnb looks ahead
Meanwhile, Airbnb shares moved higher by 13%. But the jump didn't come without some volatility, as the travel company's fourth-quarter financial report still reflected the tough conditions in the industry.
Airbnb's fourth quarter was predictably ugly. Revenue fell 22%, closing a year in which total sales were down 30% from 2019 levels. Net losses widened substantially due to IPO-related stock-based compensation charges, although adjusted pre-tax operating losses nearly disappeared during the quarter.
Yet Airbnb noted that things could've been so much worse. The travel company had thought that it might see revenue get cut in half for the year, and so the smaller decline, while painful, was still better than expected.
More important, Airbnb is looking forward to a travel rebound in 2021. It's preparing to handle pent-up demand by any means necessarily, with a focus on improving the experience for both guests and hosts -- and making sure to take its share of transactions from both.
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February 27, 2021 at 01:57AM
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