With the 2024 Olympics now complete, sports fans are turning their attention to this year’s red-hot Formula One racing season.
And it’s quickly shaping up to be one for the ages…
This year’s races have delivered all the action a racing fan could want — from thrilling victories to stunning defeats and surprise finishes that shocked even the most die-hard racing fans.
Max Verstappen came into this season as the sport’s top driver, 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 was expecting to see more of the same in 2024.
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 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 two 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.
Viewership and Valuations
A year ago, almost to the day, I ran my initial scan of Formula One stock through Adam O’Dell’s Green Zone Power Ratings 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 “Bearish” 39 out of 100 in Green Zone Power Ratings. Stocks in this category are expected to underperform 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 93 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 19% year-to-date, beating the broader market’s 12% 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 now a stock to avoid, so I’ll do that.
Now, back to wondering how McClaren will let another race win slip through their grasp…
These next two weeks can’t go by fast enough.
Until next time,
Chad Stone
Managing Editor, Money & Markets
