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There was a notable merger in the powersports business this week as online motorcycle marketplace RumbleOn has merged with brick-and-mortar powersports chain RideNow Powersports to form the kind of omnichannel company we're used to seeing in the automotive sector.
The merger is expected to close later this year. The combined companies generated approximately $1.3 billion in revenue in 2020, according to the announcement, and they expect that to increase to a range of $1.45 billion to $1.55 billion for 2021. RumbleOn is a publicly traded company that has seen some wild swings in its stock price since it was founded in 2017 and this news briefly doubled the stock, jumping from below $30 several days ago before the news started leaking out and topping $64 yesterday. That's still a big drop from the all-time high of $219.60 in 2018 (and a big jump from the low of $3 in 2020). RumbleOn is still a long way from achieving profitability and this deal involves $280 million in new debt and issuance of new equity.
RideNow, meanwhile, has more than 40 dealerships mostly across the southern half of the country, from Florida to Washington and from North Carolina to California. Founded in 1983 and based in Arizona, RideNow dealerships sold more than 45,000 vehicles in 2020. Of those, 42 percent were motorcycles and Polaris and Harley-Davidson were the biggest brands, but RideNow also sells Japanese brands.
RumbleOn currently has more than 52,000 used vehicles listed on the website. More than 90 percent of those are being offered for sale by dealers, with the remaining for sale by private owners. And while personal watercraft, recreational vehicles, snowmobiles and more also appear on the site, most are motorcycles.
Just as companies in the car space, such as Carvana, will make an offer on your used car, RumbleOn does the same with motorcycles. It also allows customers to apply online for financing.
"We are creating the only omnichannel solution in the powersports industry," said RumbleOn CEO Marshall Chesrown. Omnichannel, referring to the seamless merging of online and in-person interactions, has been the focus of most consumer companies in recent years. Another trend we've seen emerging is a hot market for used motorcycles, partly caused by disruptions in production of new motorcycles last year and partly by a desire for more affordable options, especially among younger and newer riders.
Companies such as Carmax and Carvana in the auto sector have ridden the trend of consumers becoming increasingly comfortable making major purchases online. The RideNow and RumbleOn founders — all of whom are powersports enthusiasts and some of whom take the opportunity to recall in the introductory video the minibikes they rode as kids — are betting that trend will turn this combination of online marketplace and the country's largest powersport chain into a profitable entity, as well.
