loanDepot, Inc. (LDI): A Bull Case Theory

We came across a bullish thesis on loanDepot, Inc. on wallstreetbets subreddit by Blamurai. In this article, we will summarize the bulls’ thesis on LDI. loanDepot, Inc.'s share was trading at $4.2700 as of September 12th. LDI’s trailing P/E was 158.73 according to Yahoo Finance.

LoanDepot (LDI) is a tech-enabled retail mortgage originator and loan servicer, focused on direct-to-consumer lending and multiple complementary revenue streams such as title, insurance, real estate referrals, and HELOCs. The company experienced rapid growth during the low-rate housing boom, surpassing $4 billion in revenue by 2020 and employing over 12,000 people.

However, elevated interest rates froze the housing market, leading to a prolonged period of losses and a declining stock price. In response, LoanDepot has focused on survival through cost reduction, headcount rationalization, and expanding its Mello platform under the “Vision 2025” initiative, setting the stage for a strategic pivot under its returning founder and CEO, Anthony Hsieh.

Recent operational improvements show the company moving toward profitability, with net losses narrowing in Q1 and Q2 2025 compared to prior quarters. LoanDepot differs from iBuyers like Opendoor in that it does not carry capital-intensive inventory risk; instead, it leverages its mortgage origination and servicing capabilities, which are less sensitive to housing price swings and can generate consistent cash flow. Key catalysts include the eventual easing of interest rates, further AI and automation integration through the Mello platform to streamline loan processing, and a “North Star” initiative focused on customer engagement and retention, where the company already boasts a 70% recapture rate, the highest in the industry.

Despite not yet being profitable, LoanDepot has substantial liquidity with over $400 million in cash and $1.2 billion in available credit, minimizing dilution risk. Institutional investors may increasingly take notice given the company’s $5 servicing-book floor valuation. With the housing market poised for a potential recovery, LoanDepot offers a compelling risk-reward opportunity, combining a scalable, tech-driven mortgage platform with the potential for meaningful upside as rates normalize and operational efficiencies take hold.

Previously we covered a bullish thesis on Rocket Companies, Inc. (RKT) by Unemployed Value Degen in December 2024, which highlighted the company’s potential to benefit from home equity loans, its tech-forward mortgage origination strategy, and the resilience of its servicing portfolio. The stock has appreciated approximately by 48.8% since our coverage. The thesis still stands as RKT maintains a strong servicing base. Blamurai shares a similar perspective but emphasizes LoanDepot’s diversified revenue streams, AI-driven efficiencies, and path toward profitability.

LoanDepot, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held LDI at the end of the second quarter which was 14 in the previous quarter. While we acknowledge the potential of LDI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.