RumbleON's Demand Picture Still Challenged, Says Analyst

Wedbush analyst Seth Basham reiterated an Outperform rating on the shares of RumbleON Inc RMBL and lowered the price target from $7.50 to $7.

The company reported revenue of $311.1 million for the fourth quarter, down 6.2% Y/Y, missing the analyst consensus estimate of $339.48 million.

The results came in below expectations on the top and bottom lines, and the company also withdrew its 2024 outlook, replacing it with a three-year plan to improve sales and margin.

Longer term, new CEO Mike Kennedy outlined a "Vision 2026" plan that calls for revenue of at least $1.7 billion by 2026 and EBITDA of at least $150 million.

The analyst noted that steps to reach these targets include growth driven by leveraging RumbleON's national scale to drive better dealership performance, better integration of its cash offer tool at the dealer level to grow its used business, and effective capital allocation.

The company's non-vehicle net debt to EBITDA ratio decreased slightly to 4.8x (from 5.0x) at the end of the fourth quarter and to 4.3x in early first quarter following incremental debt pay down after closing the sale of its RumbleOn finance facility, noted the analyst.

The analyst said costs are being managed tightly and RMBL's balance sheet restrictions are being addressed, providing the company with far more flexibility.

However, the analyst is hesitant to point to near term upside with the demand picture still challenged. 

For the longer term, the analyst noted the company's targets are ambitious, but achievable once unit demand returns and GPU headwinds dissipate.

Price Action: RMBL shares are trading higher by 10.20% at $5.51 on the last check Friday.