We came across a bullish thesis on Formula One Group (FWONA) on Substack by Soren Peterson. In this article, we will summarize the bulls’ thesis on FWONA. Formula One Group (FWONA)’s share was trading at $77.96 as of March 10th. FWONA’s trailing and forward P/E were 68.11 and 76.34 respectively according to Yahoo Finance.
A team of championship drivers racing their Formula One cars around a track.
Liberty Media Formula One is a unique investment that requires a long-term perspective due to the sport’s seasonal revenue fluctuations. The number of races per quarter significantly impacts earnings, making it essential to analyze trends over multiple years rather than in isolation. In 2024, Formula One saw a pivotal year with its growing popularity in the U.S., the initiation of a MotoGP acquisition, and a major leadership transition with the departure of longtime CEO Greg Maffei. His successor, Derek Chang, brings deep experience, having led NBA China’s successful expansion. Given that Liberty Media has long identified the U.S. and China as the most critical growth markets, Chang’s expertise in the Chinese market positions the company well for its next phase of global expansion.
Liberty Media has developed a vertically integrated model for Formula One, ensuring it controls various revenue streams beyond race weekends. The company owns its streaming services, sponsorships, ticketing analytics, licensed merchandise, and fan engagement initiatives like F1 Arcades and media partnerships. The Las Vegas Grand Prix was a milestone in this strategy, marking its first fully controlled race weekend, including track ownership and promotional events. This integration strengthens its ability to maximize revenue from each aspect of the fan experience. The company’s overarching strategy is to engage as many fans as possible worldwide, making races more accessible while generating new touchpoints through streaming, events, and merchandise. Tactical execution includes increasing race weekend value through expanded sponsorships, adding sprint races, and making each Grand Prix a full-scale entertainment event. The 2024 acquisition of Quint, a company specializing in experiential event planning, aligns perfectly with this strategy by enhancing the race weekend experience through curated travel and hospitality services.
Capital allocation remains a cornerstone of Liberty Media’s approach. The pending acquisition of MotoGP is a strategic move that mirrors Formula One’s core strengths, tapping into a similarly passionate fanbase and high-speed, action-packed events. MotoGP’s shorter race duration also aligns well with modern audiences’ shifting preferences toward more digestible content. Meanwhile, Liberty’s classic John Malone-style transactions continue with plans to spin off Quint and its Live Nation holdings into a separate entity while consolidating Formula One, its upcoming 86% stake in MotoGP, and its ownership of the Colorado Avalanche and Denver Nuggets under a streamlined structure.
The company’s broadcasting deals further underscore its strong monetization capabilities. Formula One’s U.S. media rights deal with ESPN has grown exponentially, from $5 million per year in 2019 to $90 million annually through 2025, with expectations of surpassing $100 million in the next renewal. With separate deals in Europe, particularly with Sky Sports, and the continued expansion of its direct-to-consumer F1TV streaming service, Liberty Media is poised to capitalize on shifting media consumption trends. These dynamics, coupled with the sport’s increasing global appeal, highlight the company’s robust growth trajectory. With a strong competitive moat, an engaged fanbase, and strategic expansion into adjacent markets, Liberty Media Formula One is well-positioned for continued long-term success.
Formula One Group (FWONA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held FWONA at the end of the third quarter which was 16 in the previous quarter. While we acknowledge the risk and potential of FWONA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FWONA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.