Rocket Companies’ longtime CEO Jay Farner has announced he will retire in June with a longtime veteran of the business lined up to succeed him on an interim basis.
Rock Holdings Vice Chairman Bill Emerson, who has already replaced Farner on the board, will take the reins of the organization as CEO after Farner departs from the role in four months. Farner has been with the company for 27 years.
“Since being appointed CEO of Rocket Mortgage in 2017, and subsequently CEO of Rocket Companies in connection with the August 2020 IPO, Jay has overseen the most rapid period of growth and profitability in our 27-year history,” said Dan Gilbert, founder and chairman of Rocket Companies, in a press release.
The board will be searching among internal and external candidates for a permanent successor to Farner with the help of an unnamed executive recruiting firm.
Analysts have speculated the move could be the precursor to a further management shakeup.
“While there is no clear takeaway from the announcement, we would note that Mr. Farner is only 49 years old, so it is possible that the company is considering broader strategic changes,” said Bose George, Michael Smyth, Alexander Bond, and Thomas McJoynt-Griffith in a report Monday.
Another publicly traded player, loanDepot, also recently announced a big change in its leadership, with company founder Anthony Hsieh stepping down from his role as executive chairman amid a proxy fight.
Rocket’s move comes as its fierce battle with United Wholesale Mortgage runs at a fever pitch after UWM finally succeeded in its longtime quest to nab the No.1 position in lending.
UWM did this in part by demanding the brokers it worked with to cease doing business with its top competitor and Fairway Independent Mortgage Corp., or face financial penalties. Rocket recently instituted a program called “Bully Shield” to fight back. UWM has also been engaging in a price war with Rocket and other competitors, intensifying market-wide margin pressure in the wholesale channel. Mortgage companies have been struggling with profitability, recording the largest, average quarterly loss since 2008 last year
Rocket and its competitor have engaged in a similar game of one-upmanship for some time, with the competition extending into the world of sports. Recently UWM President and CEO Mat Ishbia completed his purchase of the Phoenix Suns. Gilbert, who is the owner of the Cleveland Cavaliers, abstained from a National Basketball Association board vote on the purchase.
At the time of this writing on Monday morning, Rocket’s stock was trading at $8.71 per share. When it first went public in August 2020, its share price opened at $18. Its 52-week low was $5.97 and its high during that period was $14.31.
KBW analysts advised “caution” regarding the future valuation of the company’s stock.
“Year-to-date, the shares have increased 25% despite the fact that fundamentally not much will change with mortgage rates falling to 6% from 7%,” they said.
