Great news today. The merger of two of my favorite companies that came up in the Web 2.0 era, Intuit’s Quicken Loans (now Rocket) and Seattle-based discount broker Redfin.
Brief History of Rocket
Rocket Companies, best known for its flagship brand Rocket Mortgage, has a deep history rooted in revolutionizing the home loan industry. Initially founded in 1985 as Rock Financial by Dan Gilbert, the company rapidly grew, leveraging early online platforms to streamline mortgage applications. In 1999, Rock Financial was acquired by Intuit and rebranded as Quicken Loans, but Gilbert repurchased the company in 2002, setting the stage for an even greater transformation.
By the 2010s, Quicken Loans had become the largest mortgage lender in the United States thanks to its pioneering digital mortgage process. The company rebranded as Rocket Mortgage in 2015, emphasizing its tech-driven approach to home financing. This shift aligned with the broader mission of Rocket Companies, which officially went public in 2020 under the ticker RKT, encompassing multiple fintech brands, including Rocket Homes (real estate services) and Rocket Loans (personal lending).
Why Rocket (Hopes to) Acquire Redfin
Today, Rocket announced its $1.75 billion all-stock offer to acquire Redfin, a tech-focused real estate brokerage. Redfin, founded in 2004, has distinguished itself with its unique business model, offering lower commissions through salaried agents and an emphasis on digital home-buying experiences. By acquiring Redfin, Rocket creates a fully integrated home-buying ecosystem, controlling both home financing, selling and shopping.
The price is a 63% premium over Redfin’s 30-day average but is a huge discount to the $10 billion Redfin was worth just four years ago during the low-interest home buying frenzy. Today, Redfin stock is trading at a 23% discount to the buyout offer, implying a significant chance the deal doesn’t go through at these terms. If I were to put a number on it, I’d say the market thinks there is less than a 25% chance the deal goes through in a timely fashion.
Assuming the deal does go through, it should strengthen Rocket’s competitive edge against Zillow, which has aggressively expanded its real estate services. A Redfin acquisition would also help Rocket leverage its vast mortgage customer base, driving more home sales while reducing friction for buyers. In a housing market increasingly shaped by technology, the deal makes Rocket a one-stop shop for homeownership.
