Is Formula One a Good Stock to Buy?
Investors in Formula One Group are hoping the excitement surrounding next year's record 24-race calendar will boost the share price. The sport's expansion will lead to increasing revenue for the company and benefit the FWONK stock price, as well as the recent results.
Formula One Group controls the exclusive commercial and promotional rights to the FIA Formula One World Championship series and the monetisation of those rights. It's a subsidiary of Liberty Media, which purchased F1 for $8bn in January 2017. The stock trades on the Nasdaq Stock Exchange under the ticker: FWONK.
The FWONK stock price has risen from $31,65 in January 2017 to $57.05 at market close on 16 November.
FWONK stock has achieved trailing returns of 9.39% over the past three years. The all-time high stock closing price was $70.08 recorded on 1 April 2022.
The Formula One Group's revenue came in at $715m in the third quarter of 2022. The figure is $47m higher than the $668 figure for the corresponding quarter in 2021. However, the operating income was $64m, which is down by $4m from the same quarter last year.
Primary F1 revenue increased in the third quarter with growth across media rights and sponsorship. Race promotion revenue decreased due to lower fees generated from the different mix of events held.
Formula 1 is delivering across all areas, including financial results, engagement with fans and action on the track.
Netflix's Drive to Survive reached #1 on Netflix in 33 countries during its debut weekend. The 24 race calendar for 2023 was announced in late September 2022. Las Vegas will host the penultimate round on a Saturday night. The season starts in Bahrain on 5 March and ends in Abu Dhabi on 26 November.
FWONK stock was rated as a 'moderate buy' based on the FWONk stock forecast views of four analysts. Three of them had 'buy' recommendations in place and one had a "sell". The highest FWonK share price forecast for 2023 was $73 and the lowest forecast was for $68.
The return of crowds drove advertising and hospitality revenue in the third quarter. Fewer flyaway races hurt race promotion revenue.
The 2023 Formula One season will feature four races in the Middle East, five in North America, three in US, four in Asia-Pacific, two in Eastern Europe, and one in South America.
The need to ship 30 metric tons of race cars, tools, parts, computers and other support equipment for each of the 10 teams per race burns a lot of fuel. Macker doesn't view this as a major risk to the business model, but it could cause issues for ESG investors.
Remember that past performance is not a reliable indicator of future returns. Never trade money you cannot afford to lose.
