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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.