RMBL - RumbleOn

[cameronfen]

I am also confused with your inventory argument.  As they scale up, there will be more buyers.  Thus, they will need bigger inventory availible for the buyers to choose from.  I mean days in inventory can't decline for ever.  If you buy 5000 motorcycles vs 500, days in inventory has to go down by an order of magnitude to have the same inventory.  I do agree though that as the reach scale efficiencies can improve days in inventory as buyer and seller are better matched.

 

Perhaps I didn’t focus more on this in my first post. They have ZERO issues selling/divesting/shifting/Fire sale-ing/punting/disposing the motorcycles. This is NOT a “can they sell it story”.  They have figured out, a while back that, NOBODY is buying motorcycles with cash offers for nearly instant liquidity. They built a tech platform to enable this. (Technically they bought/paid for it from the same group that built the Truecar tech). Think about it, most items we own- small and big ticket- can be sold rather quickly. This includes cars. Motorcycles are similar to cars EXCEPT, they are a want NOT a need.  Therefore, there are many of these “toys” sitting around and no efficient way to sell them. Sure you can post it on Craigslist or other sites and get lucky, but chances are your going to deal with a lot of headaches. You can sell your car by yourself but most choose not to and same with a home, which very few sell on their own. Beyond the “toys” in the garage collecting dust, RMBL has proven their ability to shift demographics from 50 year old men towards women and millennials. (I’m being a bit overly broad here). Younger people want liquidity and are non commital. Women don’t want to haggle. (Stereotyping, I know). Dealerships dont offer cash. SO, here is your first platform company that will buy your motorcycle almost instantly. (They are vehicle agnostic and the tech can apply to anything with a VIN #) So to find those bikes they need to market. (See previous post). Once the bike is acquired, they never see it or touch it. It’s picked up, transported and reconditioned through their dealer network. It’s simultaneously listed in their site for a limited time period and if it doesn’t sell to a consumer, it’s sold to a dealer or sent to auction. In all three scenarios they are profitable. This is totally divorce from Carvana that buys vehicles at auction and sells to consumers. RMBL BUYS FROM CONSUMERS AND WILL INCREASE THE AMOUNT SOLD TO CONSUMERS BUT IN AN EFFORT TO HAVE FREED UP CAPITAL, they turn the bikes quickly.

 

How can they make a profit buying a bike from a private person and in case they can’t sell it to another private person, resell it to a dealer? I doubt they make a profit in this case.

 

Also, with no involvement on their own, how can they prevent buying lemons that have non obvious issues (from scrapes etc)?

 

They do make a profit when buying from a person and selling to an auction. (Dealer > auction)

 

Please see their deck. 

 

They prevent buying lemons because motorcycles are simple machines.  They get pics, VIN #s, and pull a soft credit check. They 100% buy a few bikes that they lose money on, it’s inevitable. But the blended GP is solid.

 

As mentioned a few times know, their tech platform steers them in the right direction to a dollar amount that makes sense for them to acquire. They aren’t guessing and with a 15% conversions rate, it seems to be working.  (If anyone has any experience in digital marketing, 15% is mind numbing)

 

You seem very positive on them.  What are the downsides?  If there advantage is the tech that the Truecar has, why didn't they or their software engineers get in on their business? (I guess one easy answer is they know the industry but curious about more...)

[LFvalueseeker]

I am also confused with your inventory argument.  As they scale up, there will be more buyers.  Thus, they will need bigger inventory availible for the buyers to choose from.  I mean days in inventory can't decline for ever.  If you buy 5000 motorcycles vs 500, days in inventory has to go down by an order of magnitude to have the same inventory.  I do agree though that as the reach scale efficiencies can improve days in inventory as buyer and seller are better matched.

 

 

Perhaps I didn’t focus more on this in my first post. They have ZERO issues selling/divesting/shifting/Fire sale-ing/punting/disposing the motorcycles. This is NOT a “can they sell it story”.  They have figured out, a while back that, NOBODY is buying motorcycles with cash offers for nearly instant liquidity. They built a tech platform to enable this. (Technically they bought/paid for it from the same group that built the Truecar tech). Think about it, most items we own- small and big ticket- can be sold rather quickly. This includes cars. Motorcycles are similar to cars EXCEPT, they are a want NOT a need.  Therefore, there are many of these “toys” sitting around and no efficient way to sell them. Sure you can post it on Craigslist or other sites and get lucky, but chances are your going to deal with a lot of headaches. You can sell your car by yourself but most choose not to and same with a home, which very few sell on their own. Beyond the “toys” in the garage collecting dust, RMBL has proven their ability to shift demographics from 50 year old men towards women and millennials. (I’m being a bit overly broad here). Younger people want liquidity and are non commital. Women don’t want to haggle. (Stereotyping, I know). Dealerships dont offer cash. SO, here is your first platform company that will buy your motorcycle almost instantly. (They are vehicle agnostic and the tech can apply to anything with a VIN #) So to find those bikes they need to market. (See previous post). Once the bike is acquired, they never see it or touch it. It’s picked up, transported and reconditioned through their dealer network. It’s simultaneously listed in their site for a limited time period and if it doesn’t sell to a consumer, it’s sold to a dealer or sent to auction. In all three scenarios they are profitable. This is totally divorce from Carvana that buys vehicles at auction and sells to consumers. RMBL BUYS FROM CONSUMERS AND WILL INCREASE THE AMOUNT SOLD TO CONSUMERS BUT IN AN EFFORT TO HAVE FREED UP CAPITAL, they turn the bikes quickly.

 

How can they make a profit buying a bike from a private person and in case they can’t sell it to another private person, resell it to a dealer? I doubt they make a profit in this case.

 

Also, with no involvement on their own, how can they prevent buying lemons that have non obvious issues (from scrapes etc)?

 

They do make a profit when buying from a person and selling to an auction. (Dealer > auction)

 

Please see their deck. 

 

They prevent buying lemons because motorcycles are simple machines.  They get pics, VIN #s, and pull a soft credit check. They 100% buy a few bikes that they lose money on, it’s inevitable. But the blended GP is solid.

 

As mentioned a few times know, their tech platform steers them in the right direction to a dollar amount that makes sense for them to acquire. They aren’t guessing and with a 15% conversions rate, it seems to be working.  (If anyone has any experience in digital marketing, 15% is mind numbing)

 

You seem very positive on them.  What are the downsides?  If there advantage is the tech that the Truecar has, why didn't they or their software engineers get in on their business? (I guess one easy answer is they know the industry but curious about more...)

 

Sorry for the delay, unplugged for a bit this weekend to enjoy fathers day with the little one.  The technology was developed by a 3rd party team that specializes in developing software for the auto industry in a variety of applications.  They probably should consider taking some payment in stock considering the upside on select clients. 

 

Ok let's dive into the risks of this story. 

 

I'll start with General risks then get more granular.  I will also offer my perspective but please keep in mind these are all REAL risks.

 

Stock Market Risk:  Microcaps tend to significantly underperform down markets and volatile markets. Flight to quality causes this effect.  Low float stocks with clean cap tables (RMBL) should perform better then most BUT lack of volume and stability could get messy.  If someone needs to unload 50k shares quickly, "Look out below...."

 

Lack of Eyeballs:  This next statement may be a bit controversial given the fundamental nature of this forum.  I am a firm believer that the fundamentals rarely, if ever, reflect in the share price of a MICRO CAP STOCK.  Telling the story, getting in front of investors and generating volume is as important as execution.  I have stated in prior posts that I look small companies a bit backwards. Buying a STORY stock seldom works for me.  I love companies that have clean cap tables with a great underlying story.  The risk is somewhat shifted from execution to, "Will investors care?".  There are a variety of reasons any company goes public early on and wants to live in the cesspool of micro cap world.  Cheaper cost of capital often is the main reason.  Well, without volume, the cost of capital is normally very high when you witness all these PIPE and Shelf deals with warrant coverage and large discounts to the prior day close.  A lack of eyeballs/followers/volume has a very negative ripple effect to any of these pubcos. Everything takes longer and more money to achieve and solid volume will enable any company to raise money efficiently and provide the flexibility required to execute.  In summary, Volume is very important.  (please note, I do not expect RMBL to raise money through equity offerings anytime soon.  If the stock moved to the $10-$20 range, they should sell 1 million shares and strengthen the balance sheet.  The shelf they filed is good housekeeping for the future)

 

The economy:  Goes without saying that a turn in the economy effects every company to some degree.  A bad economy will multiply the market risk and volume risk by creating pressure on small companies and making it harder to find interested buyers.  Oddly enough a bad economy would be really interesting for RMBL on.  Ultimately, I pray this doesn't happen but it would be really interesting to see the effect on this business model.  Their cash offers would sky rocket as the first thing people divest of is their toys.  Boats and Bikes will be some of the first things people need to sell.  If this were to happen the only question is, "Can they continue to distribute effectively?".  My guess is RMBL would experience a massive spike for some time frame but the long term effect would lead to a change in their business model. 

 

Competition:  I would like to see some competition in the sector but multiple players entering the business would lead to higher digital marketing costs and SEO.  Some competition would validate the business, too much could create a mess for all parties.  Keep in mind the US market for used bikes is over $7 billion per year so there is room for a few players.  The last thing we want is a VC backed group of cowboys spending massive amounts of marketing dollars to gain market share.  The "grow at all costs" mentality of new entrants will hurt RMBL.

 

Consumer Distribution Shift:  The longer this process takes the longer time to profitability.  How long will it take them to crack the code to shift the distribution to 50/50 dealer/auction Vs. consumer.  It is unknown at this point.

 

I believe it is very important to take a step back and acknowledge that many of the risks to this business are not even known by management at this point.  They went live in September of 2017.  It hasn't even been one full year and they will make lots of mistakes as every early stage company does.  The beautiful part is, this team has been doing this for 40 years and most of the major blunders should be avoided.  From conversations with the team, they are taking a very responsible approach to growth.  They can scale harder but they have chosen to strategically throttle the growth to ensure that the backbone or infrastructure is stable and can support the future. 

 

[LFvalueseeker]

I was having a conversation with a former hedge fund manager over the week about RMBL vs. Carvana.  This individual invested privately in Carvana before the IPO and is a large shareholder in RMBL.  From a valuation perspective, Carvana currently has a $6 Billion market cap.  They generated $360 million in Q1 revenues and lost $53 million.  On a full year basis they are trading a 4X revs. 

 

RMBL is growing much faster on a percentage basis and losing a lot less with cash flow breakeven approaching quickly.  But using a simple revenue multiple the result is much higher share prices.  Just annualizing Q2 anticipated revs of $16 million you will get to a market cap of $128m at 2x,  $192m at 3x and $256m at 4x.  That puts the stock in the $10.50 to $21.00 range. 

 

At the projected $100m 2018 revenue number that equates to a range of $16.50 - $33.00. 

 

[LFvalueseeker]

For those that care about technicals, this is a beautiful set up.  Needs some volume and close above $5.50.

[spartansaver]

In FY17 the average sale price of a bike was $10,363 and the average cost was $9,730 (excludes auction fees, transportation and recondition cost) equating to a gross margin of 6%. This is below management's estimate of a 13% gross margin when at "scale." Why should the average gross margin more than double per bike?

[netnet]

this looks very interesting.  It seems to me that there are not very many barriers to entry though.  Please correct me if I'm wrong. (Other than the narrow moat of a name brand.)  Nothing that they are doing with dealer networks would stop a competitor creating an alternate network.  There maybe some scale economies, the business model is unique, and Ithey may have operational efficiencies/excellence, but can't they be copied?

 

I still need to look deeply into both the market and the management, but the question is this, assuming everything checks out: Is this a really major position type company, or is this a speculative arbitrage between its current price and how a fast growing platform type company should be valued?

[LFvalueseeker]

In FY17 the average sale price of a bike was $10,363 and the average cost was $9,730 (excludes auction fees, transportation and recondition cost) equating to a gross margin of 6%. This is below management's estimate of a 13% gross margin when at "scale." Why should the average gross margin more than double per bike?

 

FY17 Consisted of ~3 months since flipping the switch on, not a great indicator.  Q1 demonstrated a ~8.5% gross margin and I suspect Q2 will show an improvement upon that.  The gross margin increases as the distribution mix shifts towards consumers and away from auctions/dealers.  I laid this out in my "Risks" post.  I believe that dealers/auctions will always be a significant percentage of distribution/sales due to the rapid turnover and cash on cash returns.  I expect turnover days to increase moderately as they allow the bikes to sit longer on the website to drive consumer sales.  There will be a distinct inflection point at which it makes sense to send to auction/dealers.  Ideally we would like to see 50/50 mix.  We saw a 33% jump in GP from Q4 to Q1, clearly this rate won't continue but it shows a path to 13% at scale. 

[LFvalueseeker]

this looks very interesting.  It seems to me that there are not very many barriers to entry though.  Please correct me if I'm wrong. (Other than the narrow moat of a name brand.)  Nothing that they are doing with dealer networks would stop a competitor creating an alternate network.  There maybe some scale economies, the business model is unique, and Ithey may have operational efficiencies/excellence, but can't they be copied?

 

I still need to look deeply into both the market and the management, but the question is this, assuming everything checks out: Is this a really major position type company, or is this a speculative arbitrage between its current price and how a fast growing platform type company should be valued?

 

First mover advantage is always nice to have in a $7+ billion market domestically.  With a enough time and money you can reverse engineer pretty much everything and find a way into any market.  That being said, I laid out the competition risk in my previous post.  Some competition will be good and validate the space.  Too much well funded competition will drive up marketing costs and create issues.  The management is highly experienced and has built the backbone of the business for a while now.  The distribution and logistics can't be created overnight and the technology underlying the bidding process is also proprietary.  Each dollar they spend on digital marketing builds their data set which will prove to be valuable and each profile gets more expensive for any entrants to acquire.  With 50,000-70,000 used bikes traded per month, there is room for a few players.  60%+ of that used volume is craigslist which should drop drastically as RMBL grows and potential entrants come in. 

 

I can't answer the "major" position type question.  I find the risk/reward extremely compelling and will be some time before we see hiccups, IMO.  This is the micro cap market and it's extremely risky regardless of the company.  In 15 years, I have never witness any public company grow from a few million to $100m in revenues in 15 months.  I think the story will be hard to ignore.  I also believe that there are several natural acquirers that are watching.  Carvana, Manheim, Adesa, Copart, Harley Davidson all make a good partners. 

[Guest Schwab711]

@LFvalueseeker:

Do you have an opinion on:

How much in sales they need to break even?

Incremental margins after that point?

Expectations for base case and bull case peak annual sales?

 

How concerned are you about the long-run trend of decreasing demand for motorcycles? What do you assume (if anything) for long-run demand?

 

Thanks for sharing your opinions here. It's been helpful to read through them.

[cameronfen]

Non Harley Davidson bikes carry higher magin because there is a less developed used market.  They initially target HD but now mix is shifting. 

[LFvalueseeker]

@LFvalueseeker:

Do you have an opinion on:

How much in sales they need to break even?

Incremental margins after that point?

Expectations for base case and bull case peak annual sales?

 

How concerned are you about the long-run trend of decreasing demand for motorcycles? What do you assume (if anything) for long-run demand?

 

Thanks for sharing your opinions here. It's been helpful to read through them.

 

Sure, here are my thoughts. Breakeven should be around $30m a quarter. (according to mgmt on the last conference call or investor call.  Seems to jive with my model)  They are approaching that run rate now.  Q2 I expect $16-$17m. 

 

I might not be understanding incremental margins question.  But margin should steadily climb to the target of 13% as the mix shifts towards consumers.  Each bike they sell past breakeven is incremental to the bottom line - less acquisition marketing cost, reconditioning, transport, etc. 

 

I believe by year end they will be at a $160mm run rate.  That's roughly a 3% market share.  Peak sales are a wild card.  I don't think they will ever achieve this because of likely acquisition by the previously mentioned companies or private equity.  However, growth will ultimately slow in the motorcycle space as it has to.  They are not motorcycle specific and their platform can tackle anything with a VIN number.  Personal Watercraft would be the next low hanging market to go after.  Essentially motorcycles on the water, simple machines.  Small jet boats could be next.  The story peaked my interest initially because a colleague of mine said the word, "boats", and I immediately started my research.  The used boat market is barbaric, to put it kindly, and disruption is inevitable.  After countless calls with mgmt, I don't think nor support them entering this market anytime soon.  Too complex.  But cars would be interesting. 

 

In their beta test when they were starting out they proved to drop the average age of consumers buying the bikes from the mid 50's to 42.  This is very important as millennials could prove to be a good market for motorcycles.  I haven't forecasted for the demand decrease over time as I think it's a very long time before this becomes a factor. 

 

I do not own this stock in my retirement accounts, I also am not looking to scalp a buck or two.  I think this is a 2-4X short term (3months - 1year). 

[LFvalueseeker]

Non Harley Davidson bikes carry higher magin because there is a less developed used market.  They initially target HD but now mix is shifting.

 

Agreed, lower unit cost but higher margins. 

[cameronfen]

this looks very interesting.  It seems to me that there are not very many barriers to entry though.  Please correct me if I'm wrong. (Other than the narrow moat of a name brand.)  Nothing that they are doing with dealer networks would stop a competitor creating an alternate network.  There maybe some scale economies, the business model is unique, and Ithey may have operational efficiencies/excellence, but can't they be copied?

 

I still need to look deeply into both the market and the management, but the question is this, assuming everything checks out: Is this a really major position type company, or is this a speculative arbitrage between its current price and how a fast growing platform type company should be valued?

 

Right now the moat is not developed but could be formitable.  It's a classic 2 sided market.  No one wants to buy from a rmbl competitor if they have no motorcycles, no one wants to sell on a competitor if there are no buyers, so the company with the largest 2 sided network takes share. 

[LFvalueseeker]

this looks very interesting.  It seems to me that there are not very many barriers to entry though.  Please correct me if I'm wrong. (Other than the narrow moat of a name brand.)  Nothing that they are doing with dealer networks would stop a competitor creating an alternate network.  There maybe some scale economies, the business model is unique, and Ithey may have operational efficiencies/excellence, but can't they be copied?

 

I still need to look deeply into both the market and the management, but the question is this, assuming everything checks out: Is this a really major position type company, or is this a speculative arbitrage between its current price and how a fast growing platform type company should be valued?

 

Right now the moat is not developed but could be formitable.  It's a classic 2 sided market.  No one wants to buy from a rmbl competitor if they have no motorcycles, no one wants to sell on a competitor if there are no buyers, so the company with the largest 2 sided network takes share.

 

Well said.

[spartansaver]

Vroom seem to be running into trouble. LFvalueseeker did management have any comments on this through your discussions with them?

 

https://techcrunch.com/2018/03/05/used-car-site-vroom-lays-off-staff-25-50-says-source-as-it-halts-dallas-and-indiana-operations/

 

 

[LFvalueseeker]

Vroom seem to be running into trouble. LFvalueseeker did management have any comments on this through your discussions with them?

 

https://techcrunch.com/2018/03/05/used-car-site-vroom-lays-off-staff-25-50-says-source-as-it-halts-dallas-and-indiana-operations/

 

From what I understand they are both sizable shareholders and like any promising private business when you raise money from VC/PE they have their own ideas.  If Vroom went BK tomorrow it would not effect my thesis whatsoever.  In fact, the VC's don't care either.  They need and focus on only 1, 1 billion company per fund. Zero's and Grand Slams.  Grow, Grow, Grow, slow down, cut bait, on to the next. 

 

Investors are fortunate enough to be able to buy RMBL at a seed/series-a valuation.  I am not interested in the final outcome as I have liquidity and hopefully can adjust my position based on inflection points - Unlike a private company which has no traditional liquidity and it's a race to the top.  If you invested in the seed round or series A of Vroom you would have a tremendous return despite the current turmoil in the news.  Same with Shift, Blinker, Auto 1, etc.  Beepi went belly up after raising over $100 million.  My guess is they peaked around a $300-500m valuation. (using the 20% rule)  I am purely interested in investing in this company based on a $50m valuation (from last weeks first post) to something between $150 and $300m. If it heads higher than that, I hope to have some shares left.  Make no mistake, RMBL will have its issues but their are clear skies ahead during this hyper growth phase they are currently in.  I will continue to make this final statement until someone provides another example.  Has anyone ever witnessed any PUBLIC company go from ZERO to $100m in revenue in 15 months?  These types of situations are reserved for the few top tier VC's.  (yes, a few.  Only a small handful actually outperform their 12-13% benchmark.  A select group produce the overwhelming majority of all VC returns)

[Foreign Tuffett]

this looks very interesting.  It seems to me that there are not very many barriers to entry though.  Please correct me if I'm wrong. (Other than the narrow moat of a name brand.)  Nothing that they are doing with dealer networks would stop a competitor creating an alternate network.  There maybe some scale economies, the business model is unique, and Ithey may have operational efficiencies/excellence, but can't they be copied?

 

I still need to look deeply into both the market and the management, but the question is this, assuming everything checks out: Is this a really major position type company, or is this a speculative arbitrage between its current price and how a fast growing platform type company should be valued?

 

Right now the moat is not developed but could be formitable.  It's a classic 2 sided market.  No one wants to buy from a rmbl competitor if they have no motorcycles, no one wants to sell on a competitor if there are no buyers, so the company with the largest 2 sided network takes share.

 

Well said.

 

I don't understand what the bolded is supposed to mean. This isn't like eBay Motors, if you sell your motorcycle using RumbleOn's site the buyer is RumbleOn itself. What RumbleOn does or doesn't do with the bike afterwards is irrelevant to you as the seller.

 

Presumably what matters to you as the seller is maximizing two variables: price and convenience (aka how big of a hassle will it be to complete the selling process). Insofar, as I can tell, RumbleOn's business model maximizes convenience at the expense of price. The Google reviews seem to support this thesis.

 

The issue is how large is the "lazy" motorcycle seller addressable market? 

 

 

[LFvalueseeker]

this looks very interesting.  It seems to me that there are not very many barriers to entry though.  Please correct me if I'm wrong. (Other than the narrow moat of a name brand.)  Nothing that they are doing with dealer networks would stop a competitor creating an alternate network.  There maybe some scale economies, the business model is unique, and Ithey may have operational efficiencies/excellence, but can't they be copied?

 

I still need to look deeply into both the market and the management, but the question is this, assuming everything checks out: Is this a really major position type company, or is this a speculative arbitrage between its current price and how a fast growing platform type company should be valued?

 

Right now the moat is not developed but could be formitable.  It's a classic 2 sided market.  No one wants to buy from a rmbl competitor if they have no motorcycles, no one wants to sell on a competitor if there are no buyers, so the company with the largest 2 sided network takes share.

 

Well said.

 

I don't understand what the bolded is supposed to mean. This isn't like eBay Motors, if you sell your motorcycle using RumbleOn's site the buyer is RumbleOn itself. What RumbleOn does or doesn't do with the bike afterwards is irrelevant to you as the seller.

 

Presumably what matters to you as the seller is maximizing two variables: price and convenience (aka how big of a hassle will it be to complete the selling process). Insofar, as I can tell, RumbleOn's business model maximizes convenience at the expense of price. The Google reviews seem to support this thesis.

 

The issue is how large is the "lazy" motorcycle seller addressable market?

 

Fair point.  I think the "lazy" low hanging fruit, which I believe will prove that the market is bigger then we all expect, is what mgmt is attacking immediately.  Lots of bikes sitting idle in garages without active registration, presumably a high income demographic that will value this service.  In time, they could morph into an active exchange where buyers and sellers complete multiple transactions.  I can only relate this to the boating world.  Many people start with one 18' boat, swap into a 24' then 30' and so on.  They get the boating bug.  I'm too scared to ride a motorcycle but I imagine it's amazing. An active liquid market place is needed as it has been in the car market for a very long time.

 

I read all the reviews and digital ad responses. These people are shocked to learn there prized possession isn't worth what they thought it is.  Just because the bike is listed on eBay motors for X doesn't mean it sells for X.  I dabbled in the old SUV market for a while and I always viewed Ebay as a place to view the listings, never transact on it.  It has a wide reach and as far as I know, zero incentive for the bike to sell as they simply care about listing fees.

[gfp]

pump pump pump....

 

 

nothing promotional going on here, is there?

 

 

This company seems like a really low float, low liquidity, story that can be pushed up by a pump campaign on a message board, or a series of message boards...  That buys motorcycles from desperate sellers who need cash same day, like a pawn shop or the old EcoATM business.  There is no moat, no 2-sided market, nobody even knows they exist.  Their niche is people who have A,) heard that they even exist and B,) need to turn a motorbike into cash in a hurry.  That may be a big enough market to grow in, but this whole promotion campaign has a pump n dump vibe to it.  Moat?  eBay has a moat.  I don't know a single rider, harley or otherwise, that even knows the name Rumble On.

[LFvalueseeker]

pump pump pump....

 

 

nothing promotional going on here, is there?

 

 

This company seems like a really low float, low liquidity, story that can be pushed up by a pump campaign on a message board, or a series of message boards...  That buys motorcycles from desperate sellers who need cash same day, like a pawn shop or the old EcoATM business.  There is no moat, no 2-sided market, nobody even knows they exist.  Their niche is people who have A,) heard that they even exist and B,) need to turn a motorbike into cash in a hurry.  That may be a big enough market to grow in, but this whole promotion campaign has a pump n dump vibe to it.  Moat?  eBay has a moat.  I don't know a single rider, harley or otherwise, that even knows the name Rumble On.

 

Promotional?  I was extremely clear that I came across this blog (which is great and I'm chasing a few ideas down from other posts) through a google alert on Rumbleon.  I disclosed that I was long a sizable amount of stock.  I laid out the risks to others and I have been utterly transparent about my thesis.  Yes it's a low float with low liquidity.  A major aspect of the risk in this name.  I have not seen a single newsletter or pump type campaign.  Frankly, very few people are talking about it anywhere.  They have a traditional IR firm and from my understanding would never pay for a promote, I would sell quicker then anyone if that happened.

 

Your friends haven't heard the name because they have been around for 9 months.  This is a public venture opportunity littered with risks.  Like every investment, is the risk worth the potential reward?

[gfp]

Promotional?

 

Yup.

[LFvalueseeker]

Promotional?

 

Yup.

 

Ok, if you review all of my posts, I think you may feel otherwise.  I joined this forum to have active dialogue on individual stocks.  Find the holes in the story and lets debate them as it tends to lead to better decision making.  I didn't join to be accused of "pumping" a stock.  Blatant pumps are my favorite short term trades.  This is anything but that.  I maintain that I have been very clear on the downsides and the fact that every microcap is inherently risky. 

[Lakesider]

I had a look at this and it doesnt seem (to me) that they are really doing anything that innovate.

 

The worry I have is that they have a pretty limited inventory, I fear growth rates are high because of the low numbers.

 

If my banana stand sold 1 banana last year and this year I sold two its time to see the VC's with my 100% growth.

[Spekulatius]

There should be seasonality in bike resale’s. Not many people buy bikes in winter. I am guessing that Q2 would be the top quarter. One might get a clue from Harley Davidsons seasonality.

[LFvalueseeker]

I had a look at this and it doesnt seem (to me) that they are really doing anything that innovate.

 

The worry I have is that they have a pretty limited inventory, I fear growth rates are high because of the low numbers.

 

If my banana stand sold 1 banana last year and this year I sold two its time to see the VC's with my 100% growth.

 

They aren't splitting atoms or curing cancer, that's for sure.  They saw a market opportunity and based on their experience went after it.  Carvana builds beautiful tower like car vending machines that are really interesting and cool to see.  They simply use technology to buy cars at auction and sell to consumers, the vending machines are a marketing tactic.  The market has rewarded them with a $6billion market cap at 3-4x 2018 revenue guidance. 

 

Inventory using the banana analogy.  If you had the capital to buy 100 bananas and sold 50 of those bananas quickly to the fruit distributor at a modest profit, you would have 50 bananas left in inventory.  You take the cash from your recently sold bananas and buy 55 new bananas.  Simultaneously though, "people" are buying  bananas from your existing inventory.  So maybe you have a total of 75 bananas.  Your selling them as quickly as your acquiring them and you maintain a certain banana inventory level that keeps enough cash free to buy juicy ripe bananas from others. That's the best I got and how I understand the churn if its efficient.