America’s largest retailer of powersports vehicles, RumbleOn, Inc. (RMBL), announced an asset purchase agreement to buy a Jacksonville-based powersports dealer to expand its footprint in Florida.
RumbleOn provides the first omnichannel customer experience in powersports. The dealer to be acquired is said to have consistent revenue growth and a history of being profitable. The acquisition will not only expand RMBL’s presence in Jacksonville but will also boost its omnichannel strategy. The deal is expected to close early in the fourth quarter of 2021, subject to certain closing conditions.
RumbleOn seeks to combine the highly fragmented powersports players into a single, large, efficiently run entity focused on improving customer experience. RumbleOn completed its business combination with RideNow on August 31, 2021, and this is the first acquisition news following the merger. (See RumbleOn stock charts on TipRanks)
Commenting on the news, Marshall Chesrown, CEO of RMBL, said, “Building a nationwide footprint of physical locations is a key element in creating an unparalleled customer experience no matter what portion of the transaction – buy, sell, trade, or finance – is online or in a local dealership. Additions like this Jacksonville location demonstrate that we are focused on quickly executing on that strategy.”
Chesrown added, “We are seeing significant levels of interest from individual powersports dealers and dealer groups of all sizes, which is a clear indication of the appetite for consolidation in this industry… We are excited for the opportunity to extend our physical presence in Jacksonville through this tuck-in acquisition, further expanding the nation’s leading retail powersports brand, RideNow.”
As part of the deal, RMBL will buy numerous manufacturer lines such as Yamaha Powersports, Yamaha Marine and Boats, Yamaha PWC, Suzuki, Benelli, KTM, CFMoto, Zero Electric Motorcycles, Ranger Boats, and Tidewater Boats from the dealership.
Recently, Wedbush analyst Seth Basham initiated coverage on the stock with a Buy rating and $55 price target, implying 63.7% upside potential to current levels.
Basham noted that the recently completed acquisition of RideNow creates the biggest powersports dealership group in the U.S. and will boost strong growth for RumbleOn. He added that the combination gives RMBL the most comprehensive product offering in the used powersports market with a $100 billion-plus total addressable market.
Furthermore, the analyst believes that the powersports industry has huge potential for consolidation as it is made up of more than 7,000 distinct dealerships in the U.S., with 85% operating only as a single location. The combined powerful base of RMBL and RideNow is well-positioned to take on additional acquisitions.
Overall, the stock has a Strong Buy consensus rating with 4 unanimous Buys. The average RumbleOn price target of $59.25 implies 76.4% upside potential to current levels. Shares have gained 21.8% over the past year.
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