| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 75.90 | -13 |
| Intrinsic value (DCF) | 96.48 | 11 |
| Graham-Dodd Method | 13.45 | -85 |
| Graham Formula | n/a |
Formula One Group (NASDAQ: FWONK) is a premier global motorsports entertainment company, holding exclusive commercial rights to the Formula 1 World Championship—the pinnacle of open-wheel racing. As a subsidiary of Liberty Media Corporation, the company orchestrates the F1 racing series, a nine-month competition featuring elite teams and drivers across iconic circuits worldwide. Founded in 1950 and headquartered in Englewood, Colorado, Formula One Group capitalizes on a diversified revenue model, including broadcasting rights, sponsorship deals, hosting fees, and digital engagement. Operating in the high-growth entertainment sector (Communication Services), F1 has expanded its audience through strategic initiatives like the Netflix series 'Drive to Survive,' attracting younger demographics and boosting global viewership. With a market cap exceeding $31 billion, the company leverages its brand equity and technological innovation (e.g., hybrid engines, sustainability goals) to maintain its dominance in motorsports while exploring new markets like the U.S. and Asia.
Formula One Group presents a compelling growth investment, driven by its monopolistic control over F1’s commercial rights and expanding global fanbase. Revenue ($3.65B in latest FY) benefits from long-term media contracts and rising sponsorship demand, though net income (-$30M) reflects high operational costs. Key strengths include low capital expenditures ($75M) and strong operating cash flow ($567M), supported by a cash-rich balance sheet ($2.63B). The stock’s beta (0.83) suggests lower volatility than the market, appealing to risk-averse investors. However, reliance on cyclical advertising/sponsorship revenue and geopolitical risks (e.g., race cancellations) pose challenges. The lack of dividends may deter income-focused investors, but F1’s digital expansion and potential new races (e.g., Las Vegas) offer upside.
Formula One Group’s competitive advantage stems from its exclusive ownership of F1’s commercial rights, creating a high barrier to entry. Unlike fragmented competitors, F1 operates as a closed ecosystem with 10 teams, ensuring centralized control over revenue streams (media, tickets, merchandise). Its 'pinnacle of motorsport' branding attracts premium sponsors (e.g., Rolex, Aramco) and top-tier broadcasters. Competitors like NASCAR or IndyCar lack F1’s global reach (24 races across 5 continents) and affluent audience (F1 fans have higher disposable income). However, F1 faces indirect competition from other sports/entertainment for viewer attention. The company mitigates this via digital innovation (F1 TV, esports) and sustainability initiatives (net-zero 2030 goal), aligning with younger demographics. Weaknesses include dependence on team performance for fan engagement and vulnerability to economic downturns affecting sponsors. Liberty Media’s ownership provides financial stability but may limit strategic agility.