Insider buying can provide an investor with valuable clues about a stock’s potential. A top-level insider will often have real-time information on how a company is trading. They will sell their stock for many reasons but if they buy stock, they are doing it because they expect the company’s share price to rise.
Here, we are going to highlight insider transactions at RumbleOn Inc (RMBL:US). RumbleOn is an e-commerce company that provides an online market place for used vehicles to both consumers and trade dealers in North America. As well as enabling the buying and selling of second-hand vehicles, the company also facilitates the trading in and financing of them. Its Vehicle Logistics and Transportation Service division enables the transportation of vehicles primarily between dealerships and auctions. RumbleOn is in the middle of a merger with RideOn, the largest powersports retailer in the US. The company is traded on the Nasdaq Stock Exchange and currently has a market capitalization of $136 million.
RumbleOn: Insider Buying
Form 4 filings show that on 23 June, three Directors of RumbleOn bought company stock. Denmar Dixon purchased 6,250 RMBL shares at a price of $39.15 per share. This purchase cost the insider approximately $250,000 and increased his holding by around 19%. Michael Marchlik purchased 2,500 RMBL shares at a price of $38.25. This cost the Director close to $100,000 and increased his holding by about 21%. Adam Alexander bought 1,500 RMBL shares at a price of $39.40. This cost Alexander around $60,000 and increased his holding by roughly 15%.
Multiple Insider Transactions
A cluster of trades on the same day brought the insider purchases at RumbleOn to our attention. When three insiders buy company stock at the same time it suggests that the sentiment within the company is very positive.
Interestingly, two of the three Directors buying stock are mergers and acquisitions specialists. Denmar Dixon spent over 20 years at Bank of America LLC where he advised on mergers and acquisitions and also founded Blue Flame Capital LLC. Michael Marchlik is also the CEO of the Advisory & Valuations division of Great America Group. These purchases suggest the pair believe the upcoming merger will have a positive impact on the share price. The third Director, Adam Alexander, is the founder and CEO of Bidpath Inc, which develops technology for the auction industry.
RumbleOn reiterated guidance in its latest update on Q2 trading. The numbers were very encouraging with revenue in the range of $140-$150 million representing an increase of 66%-78% growth compared to the prior year. Gross profit of $18-$19 million was forecast which would be an increase of 113%-125% versus Q2 2020.
As long as the closing conditions are met RumbleOn is expected to merge with Rideon in the third quarter. Assuming the combination had come together on January 1st 2021, it expects full-year revenue for the combined group of $1.45 billion to $1.55 billion and adjusted EBITDA to come in at between $110-115 million.
Given this encouraging update we see the recent insider buying at RumbleOn as bullish. It suggests that the insiders believe the shares are undervalued, despite having tripled in value over the last 12 months.