Dare to Go Off-Road with a Speculative Stake in RumbleOn

You’d better get your helmet, as we’re about to take a ride with up-and-coming automotive e-commerce platform RumbleOn (NASDAQ:RMBL). Like a motorcycle or all-terrain vehicle, RMBL stock doesn’t just go in a straight line and has been known to veer off in unexpected directions.

Man going fast on a motorcycle
Source: Alexander Kirch / Shutterstock.com

Texas-based RumbleOn seeks to serve a total addressable market valued at more than $100 billion. According to the company, the demand for outdoor sports equipment surged in the wake of Covid-19’s emergence.

On the other hand, it’s been tough to stay the course with RMBL stock as it’s been both volatile and range-bound in 2021. This type of price action can be a paradise for short-term traders, but frustrating for long-term investors.

There’s no need to fret, though, as RumbleOn should reward patient shareholders in the long run. As the company transitions into an omni-channel business, RumbleOn is becoming not only a niche-market leader, but a powerful revenue generator.

A Closer Look at RMBL Stock

Before we continue with some technical analysis, we should observe a significant event pertaining to the RMBL stock price. Specifically, this event is a 1-for-20 reverse stock split that RumbleOn announced on May 19. So, be sure to factor that in as we chronicle the stock price’s trajectory.

With that in mind, we can discern some patterns with RMBL stock in 2021. During the first half of the year, the stock displayed wild price action, bouncing between $30 and $55.

Starting in the summertime, however, the tug-of-war between the buyers and sellers calmed down somewhat. In time, the stock’s price moves would narrow to a range of $30 to $42. There was a breakout attempt in November, but that failed and by early December, RMBL stock was back in the aforementioned price range.

Is the stock destined to remain stuck forever? If RumbleOn can prove its value to the trading community, perhaps a jailbreak is imminent, or at least inevitable.

Broadening the Business Model

With typical bravado and braggadocio, RumbleOn declared in its most recent investor presentation that the company is not only the nation’s largest power-sports dealer, but is also now the only omni-channel power-sports platform.

That’s quite a claim, wouldn’t you agree? I won’t hesitate to admit that subsidiary RideNow is huge, with its 40+ full-service dealerships and roughly 1,900 employees.

RumbleOn acquired RideNow in August, and that’s when RumbleOn CEO Marshall Chesrown declared his company to be “the first omnichannel customer experience in powersports.”

There’s merit to the CEO’s contention, as the merger allows RumbleOn to combine its own business model (an e-commerce platform where people can buy pre-owned off-road vehicles online) with RideNow’s bricks-and-mortar dealership network.

Thus, Chesrown cited “RideNow’s extensive geographic footprint, strong retail brand combined with RumbleOn’s technology platform, and access to pre-owned inventory will make powersport vehicles more accessible to the enthusiast and the first time buyers, nationwide”

Plenty of Cash and Huge Sales

Ever ambitious, Chesrown declared that his company is “on a mission to transform the powersports industry.” That’s all fine and good, but informed investors will want to see the hard financial data. Show me the money!

There is money, and plenty of it. As of Sept. 30, 2021, RumbleOn had $68.268 million in cash (unaudited), a vast improvement over the $1.467 million held at the same time last year.

Overall, it’s fair to say that RumbleOn had an outstanding third-quarter this year:

  • Total vehicle unit sales of 8,518, up 99.8% increase from 4,263 in the year-earlier quarter
  • Total power-sport unit sales of 5,490, a huge increase over the 747 recorded in 2020’s third quarter
  • $221.2 million in total revenues, an increase of 88.1% year-over- year
  • $37.4 million in total gross profit, which is more than double the $16.8 million reported in the same quarter of 2020

Hence, the outlook remains bright as RumbleOn projects full-year 2021 revenues in the range of $1.55 billion to $1.6 billion.

Bottom Line

RumbleOn’s CEO isn’t afraid to boast about his company. However, his claims are credible as RumbleOn is truly becoming an omni-channel business. Besides, there’s no shortage of financial data to show that RumbleOn is on the right track.

Therefore, it’s entirely possible that RMBL stock will break out to the upside in the near future. Until then, just hang on and try to enjoy the ride.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2021/12/dare-to-go-off-road-with-a-speculative-stake-in-rmbl-stock/.

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