When people think about cars they often think of depreciating assets. There’s an app that’s trying to change this perception, especially since collecting cars tends to pay off in the long run. But only if you invest in the right vehicle. Collectible cars have typically delivered a 300+% return on the original investment value over ten years. Rally Rd., an app for buying and selling equity shares in classic cars, set out to prove that investing in collector cars is easy and pays off.
Rally Rd, founded in New York in 2016 currently has over 100,000 members who have traded about $4 million on the platform. The average age of its investor is 27. Membership offers the ability to purchase shares in Ferraris, Porsches, Lamborghinis and other classic cars. Essentially, each car on Rally Rd. is a mini public company, which is divided into 2,000 shares. Investors can create a diversified portfolio of interest in each of these collectible cars share by share, car by car. Investments start as low as $50 and the goal is for everyone to have access to this high-value asset class. You can buy and sell shares as they see fit for your portfolio. Through the app, you can submit your shares for sale through a registered broker-dealer and then connect you to other potential buyers who’d like to buy those shares. The average account balance is $1,000 with most customers invested in three deals at any given time. Chris Bruno and Rob Petrozzo founders of Rally Rd., said in a recent interview that the crypto boom and bust put digital asset investing in the mainstream, helping to bolster businesses that would have seemed pretty odd just a few years ago.
The cars featured in the app are always for sale. The vehicles are registered for sale through a registered broker-dealer available in 32 states; the company is still working on obtaining licenses for the remaining 18 states. Rally Rd. consults their advisory board before purchasing any car. They always track the data through the app and are trying to understand when it’s the right time is to exit an investment. When they do exist an investment, aka sell the car, the funds that come back from liquidating that car are distributed among all investors. Cars stay on the platform for varying amounts of time. Bruno said a Mustang may stay on the platform for six months while a 1995 Porsche Speedster may be viewed as a blue-chip asset and hang around for longer. The executive said supply and demand ultimately determine the longevity of a vehicle on the platform. “The process is very much dictated by the user base and investors in that asset. We’re tracking the temperature if it’s a good time to sell.”
Over the next few months, investors can visit a vehicle showroom where users can go to participate in initial car offerings in-person in Los Angeles, South Florida and possibly Texas, where they have a strong user base. “We want to create that Apple Store atmosphere where anyone can come in and learn about equity investing on the spot,” said Petrozzo, Rally Rd.’s chief product officer. There’s already a showroom in New York, which opened up earlier this year. The main attraction here is a 1980 Lamborghini Countach Turbo that’s priced at $127 a share.
For now, Rally Rd. isn’t making money. They don’t take any management fees or share of the offering. Bruno says their plan to generate revenue is to adopt the Robinhood model and are building out a subscription service for those interested in premium access. The app is also currently only live in the U.S., but there are plans for expansion around the globe, beginning with Australia, Europe, and Canada.
The app’s design shows their process transparently. You can view filing statements and proof of authenticity for each vehicle. Investments can be made at the touch of a button in 3 easy steps: 1) Create a free account, 2) Browse available assets, and 3) Invest. Pretty simple, right?
Would you invest in these classics via Rally Rd.? Let us know in the comments.
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