Red-Hot F1 Season, but a Caution Flag for FWONK |
Money & Markets Daily,
Move over, Olympics…
2024’s Formula One season is quickly shaping up to be one for the ages — complete with thrilling victories and stunning defeats.
So far, this season is delivering all the action a racing fan could want. And it's blindsiding even the most die-hard viewers.
In recent years, a driver named Max Verstappen has emerged as a near-unbeatable force in his dark blue Red Bull car.
Verstappen won 19 out of 23 races last year. His dominance of the sport was so complete that casual fans started to feel like the races were “boring.” Everyone expected another runaway campaign.
I’ll admit — even I felt a little pessimistic and was already looking forward to Lewis Hamilton shaking things up when he joins Ferrari in 2025.
But now, we've hit the 2024 summer break (a brief rest period in a 9-month, 24-race season), and all bets are off.
Verstappen and Red Bull's early-season cushion is shrinking as McClaren's duo of Lando Norris and Oscar Piastri close the points gap…
Hamilton, who had 103 wins heading into 2024, has taken the checkered flag not once but twice. Those are his first victories since 2021…
And overall, seven different drivers have won this year!
Racing fans are already looking forward to a blockbuster second half of the season, which starts just three weeks from now. (I highly recommend tuning in for the Dutch Grand Prix on August 25.)
But has that excitement translated over to Formula One stock, aka Liberty Media Corp. Series C (Nasdaq: FWONK)?
Let's take a pit stop and check its Green Zone Power Ratings.
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Viewership and Valuations
A year ago, almost to the day, I ran my initial scan of Formula One stock through Chief Investment Strategist Adam O'Dell's system.
My argument for FWONK stock has always been that viewership needs to support its elevated valuations, and there are good tailwinds on that front.
Back in May, a record-breaking 3.1 million people watched ABC's coverage of Lando Norris's first Formula One win at the Miami GP. That's a great sign, especially if we have a tight battle heading into October's U.S. GP in Austin, Texas.
But that's still peanuts compared to other sports. For reference, Statista found that average per-game viewership for an NFL regular season game last year fell just shy of 18 million.
I'm not expecting Formula One to compete with the biggest sport in America, but the comparison shows how relatively niche this motorsport still is despite its explosion in popularity over the last few seasons.
And valuations are still a major issue.
Right now, FWONK stock rates a "Neutral" 44 out of 100 in Green Zone Power Ratings. Stocks in this category are expected to track the broader market over the next year.
Growth is strong, with the company reporting $587 million in revenue for the first quarter of 2024, a 54% increase year over year. That's partly why it rates a 94 on that factor.
But FWONK's Value factor is still waving a major red flag with a 4 out of 100. That number tells us investors are already banking on that growth to catch up and bring valuations in line with what the stock is actually worth.
That sentiment is reflected in FWONK's recent momentum as well, with the stock gaining 25% year-to-date, beating the broader market's 15% gain. It's a great trend that reflects the exciting action we're seeing on track each race weekend.
That said, I'm sticking to what our system reports. It says FWONK is still a stock to watch, so I'll do that.
Go ahead and run some of your favorite stocks through Green Zone Power Ratings. It's an incredible tool that gives you a snapshot of what to expect in the coming year.
Now, back to wondering how McClaren will let another race win slip through their grasp…
These next three weeks can't go by fast enough.
Before we go: Have you been following this year’s F1 season? If so, who do you think will win it all?
I’d love to see Norris close the points gap and win his first driver's championship. It's a long shot, but that's what sports are all about! Let me know at Feedback@MoneyandMarkets.com.
Until next time,
Chad Stone
Managing Editor, Money & Markets Daily
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