We recently compiled a list of the 10 Best Leisure Stocks To Buy Now. In this article, we will look at where Formula One Group (NYSE:FWONK) stands against the best leisure stocks to buy now.
In recent years, the leisure market has experienced remarkable growth. According to Market Research Intellect, the size of the global leisure market was estimated at $1.46 trillion in 2023 and is projected to expand at a compound annual growth rate of 21.8% from 2024 to 2031, when it will have grown to $8.6 trillion.
Along with growth, according to the YouGov survey, there were also notable changes in the leisure and entertainment industry in 2023 due to changing customer demands and technological breakthroughs. Even though 81% of US and 79% of UK customers recognize the value of museums, more than half of them only occasionally visit them. On the other hand, only 5% of people in the APAC and UAE skip theme parks, compared to 30% in North America.
While out-of-home entertainment expenses are on the rise, 13% of customers intend to spend more. Additionally, 36% of viewers find advertisements entertaining, and 36% of them are using virtual reality. In the United States, 10% prefer to buy movie tickets in advance, while 27% are concerned about how AI breakthroughs may affect professions, notably in information technology and accounting.
In the meantime, gambling is changing; 70% of US gamblers are open to sports betting with AI assistance, and cryptocurrency betting is becoming more popular in the US and the UK. As we have mentioned in our article, “10 Best Sports Betting Stocks to Buy Now,” generative AI is projected to dramatically impact sports betting in the next 12-18 months.
As per YouGov study, with 10% of UK consumers possessing smart devices and 24% looking at second-hand equipment, the fitness industry has also experienced growth. In general, live events such as food and drink festivals remain popular; even with safety concerns, 45% of attendees want to participate in 2024. Lastly, a shift in consumer views is evident in the rise of dynamic pricing, particularly in the US, where 54% of consumers are willing to pay more to support artists.
On the other hand, the size of the global leisure travel market was valued at $340.31 billion in 2022 and is projected to grow at a CAGR of 22.6% from USD 417.3 billion in 2023 to $2129.96 billion by 2031, as per SkyQuest.
Regionally, North America has been the market leader for leisure travel, especially the United States and Canada. However, when it comes to the global leisure travel industry, Asia-Pacific is expanding at the fastest rate. Countries in Southeast Asia, such as China and India, are major destinations for tourists in the area.
Amid the growth, a most recent Longwoods International tracking study of American travelers indicates that 39% of them plan to go abroad for leisure over the next 12 months. Furthermore, 34% of those who plan to travel abroad for leisure say they will travel abroad more this year, 50% plan to take about the same number of such trips, and only 16% say they would travel abroad less.
Amir Eylon, President and CEO of Longwoods International, stated that the expected boost in international travel by Americans is impressive, given lingering concerns about inflation and the financial health of the U.S. consumer. Moreover, he revealed that it is further evidence that American travelers see COVID-19 fading away in their rear-view mirror.
Methodology:
We sifted through holdings of leisure ETFs and online rankings to form an initial list of 20 leisure stocks. Then we selected the 10 stocks that were the most popular among institutional investors. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. We have used the stock’s Revenue Growth Rate (year-over-year) as a tie-breaker in case two or more stocks have the same number of hedge funds invested.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
Formula One Group (NYSE:FWONK)
Number of Hedge Fund Holders: 50
Revenue Growth Rate (year-over-year): 25.22%
The principal business of Formula One Group (NYSE:FWONK) is the monetization of its exclusive commercial and promotional rights to the FIA Formula One World Championship series. Together with its three partners—the Formula One Association (FIA), the racing teams, and the series’ sponsors, broadcasters, advertisers, and race promoters—the firm is in charge of creating and promoting the Formula One race series. Formula One Group is a business that was acquired by Liberty Media in January 2017. Formula One stock is a tracking stock for the properties owned by Liberty Media and the Formula One Group.
Successful collaborations and sponsorship agreements propelled FWONK to a 36.46% YoY gain in Q2 2024.
Evercore ISI maintained its Outperform rating on the shares and increased its price objective for the company from $85 to $90. Even without assuming the MotoGP transaction, which is anticipated to conclude at year’s end, the company projects that F1 Group may improve EBITDA 31% year over year in 2024 and 15% in 2025, the analyst informs investors. The analyst stated that F1 Group is still a top choice and is on Evercore ISI’s SMID Core List.
With a $77 price target, Citi reiterated its Buy recommendation on Liberty Media Corp.-Liberty Formula One (NASDAQ: FWONA), citing a modest decline in EBITDA but stronger revenue projections. Despite slight modifications to its financial model, the company is still bullish about the stock.
Artisan Mid Cap Fund stated the following regarding Formula One Group (NASDAQ:FWONK) in its Q2 2024 investor letter:
“Along with Lattice Semiconductor, Celsius and Tyler Technologies, notable adds in the quarter included West Pharmaceutical Services, MACOM and Formula One Group (NASDAQ:FWONK). Since acquiring F1 in 2017, Liberty Formula One has expanded the fan base to newer markets (like the US and China) and a younger demographic through efforts like the “Drive to Survive” series on Netflix, recasting broadcast agreements and making the sport more competitive (through adding cost caps, instituting standardized parts and changing prize money distribution). As its audience continues to grow, we believe F1 will be able to increase future monetization and profitability through higher broadcasting fees, better sponsorship and hospitality opportunities, and extracting more value out of races from promoters. Recent earnings results were thesis affirming. Sports rights continue to grow in value as streaming services compete for proprietary content, and the one-off costs incurred to launch its Las Vegas race in 2023 should support margin expansion in 2024. We moved the position into the Crop® of the portfolio.”
Overall FWONK ranks 9th on our list of the best leisure stocks to buy now. While we acknowledge the potential of FWONK 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 time frame. If you are looking for an AI stock that is more promising than FWONK 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 post was originally published on Insider Monkey.
