LoanDepot Stock Jumps 35% In A Week, Time To Buy?

LoanDepot (NYSE: LDI), a non-bank lender offering mortgage and non-mortgage products, has seen its stock surge from under $2 in early September to about $4.50 per share, more than doubling in just a few weeks. The sharp rally follows a bullish call from Citron Research, the influential newsletter run by well-known short-seller Andrew Left, which argued that the market is underestimating the strength of LoanDepot’s mortgage servicing portfolio. This business generates recurring fees from managing payments, escrow, and accounts on existing loans, providing a stable income stream even when originations slow. In a cyclical industry like housing finance, where loan volumes swing with interest rates, strong servicing gives LoanDepot better earnings stability that investors may now be starting to price in.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio is designed to reduce stock-specific risk while giving upside exposure.

Image by Tumisu from Pixabay

Besides this, the stock has also been boosted by shifting macroeconomic tailwinds. Expectations of lower interest rates, following a weak August jobs report, have made investors more optimistic about mortgage lenders. Lower borrowing costs could unlock demand from both new buyers and refinancing customers, directly benefiting LoanDepot’s pipeline. At the same time, the company has made some operational improvements. Loan origination volumes jumped 30% in Q2 2025 compared to Q1, while revenue also climbed, reflecting better execution. Management’s push toward digital transformation and operational efficiency is aimed at cutting costs and enhancing customer experience, both critical in a competitive mortgage market.

Financials & Outlook

Still, the fundamentals show a more nuanced picture. LoanDepot trades at a steep discount with a price to sales multiple of 1.1x versus 3.2 for the S&P 500, but its negative P/E (-13.6) and weak P/FCF (-2.0) highlight ongoing losses and cash burn. In fact, the company hasn’t turned an annual profit since 2021, post the big pandemic-era refinancing boom. Growth has been inconsistent. Revenues shrank at an annual average rate of -17.2% over the past three years – though the recent rebound is impressive, with sales up 20.5% in the last twelve months and 22.4% year-over-year in the latest quarter, far outpacing the market.

Looking ahead, there are some challenges.  Affordability has been a major limiting factor in the U.S. and slower household formation could limit upside, although policy shifts might provide relief. With Republicans signaling housing affordability as a 2026 mid-term campaign focus, LoanDepot could see a political tailwind that could potentially boost mortgage demand. Overall, the stock appears to offer a high-risk, high-reward setup with some positive near-term catalysts and servicing strength on one side, although profitability issues are something investors must keep an eye on.