$0.00
$1.50
bear $0.00
base $0.00
bull $1.50
margin of safety $0.50
market price* $4.81
Business condition attached to the margin of safety
The term loan (due September 2027) must be refinanced on terms that leave interest costs at or below roughly the 2025 level, and the company must show two or more consecutive years of positive owner earnings after interest.
RideNow Group (formerly RumbleOn) is the largest powersports retailer in the United States by its own description. It sells new and pre-owned motorcycles, ATVs, side-by-sides and personal watercraft, plus parts, accessories and financing and insurance products, through 48 stores as of the end of 2025, mostly in the Sunbelt with concentrations in Arizona, Florida and Texas. Revenue has fallen for three straight years, from $1,459M in 2022 to $1,366M, $1,209M and $1,083M in 2025. How we measure earnings. We start from operating cash flow and remove the swings from inventory, receivables and floor-plan financing, then subtract stock compensation and the capital spending needed to keep stores running. Impairment charges ($34.8M in 2025, $39.3M in 2024) are non-cash and are added back. On that basis owner earnings per share were about $(0.14) in 2025, $(0.49) in 2024, $(3.33) in 2023 and $2.07 in 2022. The 2022 figure is flattered because a $120M inventory build that year was partly funded by floor-plan borrowings that sit in financing, so we treat it as distorted. The median of the 2022 to 2025 window, which is the period since the 2021 RideNow acquisition, is negative. Why the earnings are negative. In 2025 the business roughly broke even at the operating level after impairments (operating loss of $0.2M), but paid about $52M in interest: $11.0M on inventory floor plans and $41.5M of other interest, mostly on a term loan at a 6.75% margin over a base rate, plus $4.6M on a finance lease. Owner earnings of about $(5.4)M in 2025 therefore reflect a business whose store-level profits are consumed by debt costs. Cash flow of $99.4M in 2024 came from liquidating $108M of inventory and collecting a $15.4M loan-portfolio receivable, and did not repeat in 2025 ($15.9M, most of which was working-capital timing). First-half 2026 revenue rose 2.3% to $557.2M and second-quarter net income was $6.5M, but operating cash flow for the half was $(27.7)M, mostly a seasonal inventory build. That is one period and does not lift our view of the earnings level. The key dated risk. The term loan (about $207.7M of principal at year end) matures in September 2027. The credit agreement requires the company to begin a refinancing process before September 30, 2026 and complete it by November 30, 2026, unless it pays the loan down to the lesser of $150M and 3.25 times EBITDA or forms a special committee and hires an adviser to evaluate strategic alternatives. Management states that existing resources are sufficient for the next twelve months, and covenants were met at year end, but the company has needed several amendments and higher minimum liquidity requirements before. Bear case ($0). The refinancing fails or comes at higher cost, cash interest continues to exceed store-level cash earnings, and any recapitalization dilutes or wipes out current shareholders. We place no negative value on the shares because the shareholders' downside is limited to what they own; the debt is large relative to the earnings power (roughly $437M of principal including floor plans against roughly break-even operating results). Base case ($0). We can name no evidenced source of positive owner earnings after interest. Four years of history show negative owner earnings in three of them, the stores are shrinking (two California dealerships were sold in 2025), and the recent quarterly profit is too short a record to lift the level. We do not credit sales growth, share gains, or a recovery in powersports demand, because none is secured or a proven repeating process for this company. The base case is therefore worth nothing to shareholders on our method, with all value going to lenders first. Bull case (about $1.50 per share). The one lever we can point to in the filings is lower interest: the convertible notes ($2.6M of 2025 interest) were repaid in January 2025, $20M of the term loan was prepaid in August 2025, and the rate was cut by 0.5%. Together with a refinancing on similar terms, this takes owner earnings to roughly break-even to slightly positive, around $4M a year (about $0.10 per share), held flat and capitalized at 6%. We add no growth. What would make us wrong. A refinancing at meaningfully lower interest, or a sustained run of positive owner earnings, would make the base case worth more. Continued store sales and shrinkage, a failed refinancing, or a debt-for-equity exchange would make the bear case the outcome. Margin-of-safety price. The margin-of-safety price is about $0.50 per share, and it applies only after the refinancing is completed on acceptable terms and the business shows positive owner earnings. Uncertainty is very high given the leverage and the small equity cushion.