RumbleOn (NASDAQ:RMBL), which operates an e-commerce platform to buy and sell pre-owned vehicles, is undergoing exciting changes that could transform the company. At the end of August, RumbleOn completed its acquisition of powersports dealer RideNow in a cash-and-stock transaction valued at more than $575 million. Following the deal’s completion, RMBL stock rallied as much as 40% into its mid-November highs.

Since then, however, shares have given back much of those gains, due in part to broader market weakness and investors’ rotation out of more speculative growth stocks. Yet, I believe the future will be bright for the newly merged company and that RMBL stock is a compelling investment.

Let’s dive into why.

RumbleOn is Pivoting to Compete

Prior to the merger, RumbleOn was a technology company offering a used-vehicle marketplace. The company’s platform focused on a wide assortment of vehicles such as cars, trucks and motorcycles.

While the company was delivering solid results, e-commerce marketplaces are usually a battle for scale. In this industry, Carvana (NYSE:CVNA) absolutely dwarfs RumbleOn with a market cap of more than $40 billion versus the small cap’s roughly $581 million valuation.

In order to compete, RumbleOn needed to find a suitable niche. And that’s exactly what it did. The merger with RideNow allows the company to focus its energy on powersports.

According to a report by Fortune Business Insights, the global powersports market reached $9.4 billion in 2019, prior to the coronavirus pandemic. The market is expected to hit $12.8 billion by 2027. The report cited heightened demand from young people for off-road vehicles for leisure and adventure tourism as a driver of this trend.

As the U.S.’ largest powersports retailer, RideNow will be a key asset for RumbleOn. RideNow has more than 40 full-service locations in 11 states, offering ATV’s, motorcycles, personal watercraft and utility vehicles.

In 2020, RideNow had $899.4 million in total revenue, selling 45,527 units. The company was profitable with $90.3 million in net income, for a net income margin of about 10%, and about $96.6 million in adjusted EBITDA.

RumbleOn to RideNow: You Complete Me

It’s clear that RumbleOn’s management has big plans for the new company. And the synergy between a strong e-commerce marketplace and a leading retailer could prove to be a winning combination for investors in RMBL stock. The move should help monetize the company’s e-commerce platform by expanding its economies of scale.

In a statement accompanying the initial merger announcement, RumbleOn’s CEO Marshall Chesrown noted that the powersports industry is highly fragmented. Thus, having a dominant platform can help RumbleON unlock additional opportunities and efficiencies.

“We are creating the only omnichannel solution in the powersports industry – offering an unparalleled customer experience for outdoor enthusiasts across the country,” Chesrown said. “RideNow’s significant physical retail platform provides the missing piece of a ‘bricks and clicks’ strategy for RumbleOn, enabling us to reach consumers wherever they want to shop, whether online, offline, or both.”

Analysts forecast revenue for the combined entity will be $860.3 million in 2021 and increase to $1.76 billion in 2022. And the company is approaching profitability.

RMBL stock is trading at an attractive valuation with a price-to-sales ratio of 0.7 times this year’s sales and 0.3 times next year’s slaes. This makes it cheaper than the vast majority of high-growth names.

Over the long term, RumbleOn is targeting at least $5 billion in annual revenue with an EBITDA margin of more than 10%. Given the pace of industry growth and the rapidly growing total addressable market, I am confident RumbleOn can hit these numbers.

The Bottom Line on RMBL Stock

All in all, an investment in RMBL stock is compelling. As mentioned, Carvana is much bigger than RumbleOn, but shares also trade with a much higher multiple at around 3.2 times this year’s sales.

RMBL stock is a speculative investment, to be sure. There is a lot of execution and operational risk with regard to the merger with RideNow. But the potential upside is enticing. Assuming management can hit its growth projections, RMBL stock could see as much as 10x upside from current prices.

I believe RMBL stock is worth the risk. Growth-oriented investors should consider a small position.

On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.