We’re back with an update on how Rocket Companies (NYSE: $RKT) 2020 year ended. As we expected, it was a great quarter. So good that Rocket announced the company is planning to issue a significant special dividend of $1.11 per share.

4th Quarter Highlights

  • Grew adjusted revenue by $3B from $1.8B in Q4 2019 to $4.8B Q4 2020
  • Grew adjusted net income by $1.8B from $0.5B in Q4 2019 to $2.3B in Q4 2020
  • Had record loan origination volume of $107.2B, closed out a record year

Rocket Loan Originations, 2020

As we discussed in our analysis prior to the 4th quarter, loan originations are surging. The company posted a record year, up 121% from 2019.

2020 was a tough year for many, but not Rocket Companies. The loan business was through the roof due to low interest rates. If there were more houses available on the market, I bet Rocket Companies would have performed even better.

On the flip side & according to my mortgage broker, pending home sales have been falling for the past 5 months. For people like me still trying to find a house with no inventory, this is good news. For Rocket Companies, falling home sales may impact 2021, so look out for that.

Rocket Partner Network Expansion

As discussed in our prior article, we wanted to be able to see how the marketing and influencer relationships are progressing. Despite the challenges with house sales falling in Q4, the partner network expanded. First chart below shows at the end of Q3 2020.

For Q4 2020, the second chart shows the partner network expanded by 2% in terms of overall adjusted revenue.

Expanding the partner network is a good long term sign to increase Rocket Companies market share. To support the expansion strategy, Rocket announced a new partnership with Morgan Stanley Private Bank where Rocket Mortgage will originate and service non jumbo loans for Morgan Stanley and E*Trade clients.

I would expect more of these types of relationships to happen and they need to. Direct to Consumer loans will have the ability to shrink depending on the housing market and rates. Cutting into more marketshare via the partner network could soften the blow if direct to consumer shrinks.

Q1 2021 Outlook

As for the forward outlook, Rocket Companies is still expecting increases for Q1 2021 with a closed loan volume of $98B-$103B and margin expansion. I can see Q1 coming in strong as the market boom accelerated later into the 2020 year.

With spring home selling season on the horizon, there could be potential for loan originations to continue to surge in Q1, as long as the rates stay stable and don’t increase beyond home affordability.

At the time of publication, the author of this article does not hold shares of RKT.