LoanDepot shares soar as it gathers retail interest

Small-cap mortgage originator LoanDepot jumped more than 9% Wednesday amid continuing enthusiastic chatter on Reddit’s r/WallStreetBets and explosive call buying in the shares that suggest the stock has become a new retail favorite.

Perhaps buoyed by the recent performance of Opendoor Technologies, traders are buying the stock, at least ostensibly, on a belief that the widely expected rate cuts the Federal Reserve is set to deliver this afternoon would lift the shares.

Perhaps. Though it’s not a sure thing that the Fed’s cuts of short-term interest rates will actually reduce mortgage rates, as they’re determined by longer-term bond yields like the 10-year Treasury note, which are more heavily influenced by the market than the Fed.

Whether or not it’s a sound thesis, it was apparently reason enough for traders to take the stock “in hand,” as market wags might have said in the 1920s. Buying of LoanDepot calls, a favorite technique of r/WallStreetBets-influenced traders, has surged in recent days.

And the stock is on a tear, up more than 150% over the last month alone. That’s clearly not the market discounting soaring growth for the company in the near term. (Sales are actually expected to shrink this quarter, according to the four analysts who post such estimates on the stock.)

But given the psychology in this market, that’s beside the point.

So did you miss the boat? Impossible to say. But the trajectory of Opendoor — up a moderate 1,700% over the last three months — suggests there could be more juice to squeeze. (Not investment advice!)