This auto dealer is taking advantage of the booming car market. It just announced the acquisition of a Chrysler Dodge Jeep Ram dealership in New York for $11 million for goodwill and $8.2 million for the associated real estate. The company expects the deal to add about $2.6 million in adjusted EBITDA or $0.26 per share in 2022.
LMP Automotive Holdings, Inc. (LMPX)
From The Wealth Advisory
LMP Automotive’s plan was to bring the subscription model to the auto market. It would buy partial interest in a bunch of dealerships for the inventory and then use their own fulfillment system to power the subscription model from the cloud.
By now, you know what a disrupter is. A new company comes in and rewrites the rules for an entire industry and makes a ton of money doing it. Well, LMP Automotive is disrupting the entire auto dealership market. And nobody knows about it!
This last quarter, LMP’s revenue went from about $6 million to $33 million. LMP turned a profit of about $2 million. It added $1.3 million to its cash balance. And gross margins doubled to 18%.
Pretty good, right? Well, wait till you see 2Q estimates. LMP says revenue should jump to $147 million (don’t forget, that’s from $33 million). Gross profit is expected
to go from $6 million to $26 million. And the company is going to double its cash
position.
And it’s currently valued at $178 million. I look at this business model and I think, Why can’t LMPX be a billion-dollar company? Fact is, I think it will be a billion-dollar company.
Now, there is one problem. LMP is no longer doing the “subscription” car business. It’s because there isn’t enough inventory to go around...
Turns out this is a pretty amazing problem to have. Demand for cars is incredibly strong—that’s why those gross margins are surging. Plus, it turns out the first step of the LMP business model—buying into dealerships—is strong enough to sustain the whole operation. Once supply is resolved in a couple years, LMP will revisit the subscription idea and we may have a whole new upside catalyst.
In the meantime, own it because the company is about to see a surge in revenue
and profit. LMP Automotive is a speculative buy under $25.
Jason Williams, The Wealth Advisory, www.angelpub.com, 877-303-4529, July2021