In the past, Formula One was not a big deal in the states, with many people in the U.S. dismissing this fast-paced $9 billion dollar business in favor of NASCAR. However, thanks to our best lock-down buddy, Netflix, Formula One (F1) has become more popular since the advent of the globally trending F1 docu-series 'Drive To Survive'.
Whilst most of us would love to become an investor in our favorite teams or sports, with F1 this is a reality. The Formula One Group is the company that owns the rights to the F1 World championship; as a public company, the Formula One Group offers several options for investors. This is an exciting industry and one that seems to be gaining popularity. So, should you invest in this motorsport and, if so, which stock should you choose?
Formula One's recent rise in popularity across the globe has lead F1 to strike a 10-year deal allowing for a second U.S. race to be hosted beginning in 2022, one at the pre-existing Texan circuit and the new one will be in Miami. This growth is positive for many investors as recent increased popularity in China could then also lay the groundwork for another race being added over there at some point in the future.
In terms of growth, the end-of-year financial report for 2019 saw audience figures increased across digital and TV platforms for the 3rd consecutive year. Cumulative TV viewers grew 9% alone and came in at 1.9 billion. For 2020 this was an average of 87.4 million viewers per race on TV platforms alone.
In revenue, growth has been substantial at 10% between 2018 and 2019, coming in at just over $2 billion for the year. Between 2019 and 2020 the pandemic cut the season short, leaving only 17 races and bringing in $1.14 billion revenue for the year. COVID-19 severely ate into the revenue streams that the group gains from ticket sales, advertisements, and sponsorship fees. For 2021, the revenue should see a spike back up to pre-pandemic levels as a record-setting 23 race season has been scheduled. Top line growth such as this should lead to stronger cash flows and a stronger share value.
So, Formula One might seem like a great way to make money and have fun at the same time. But, it has three different stocks that an investor can choose to buy; Series A, B, or C. But whilst this might seem confusing, we have done the leg work for you and explain each one below.
Formula One Group Series A (NASDAQ: FWONA) and Formula One Group Series C (NASDAQ: FWONK) are essentially the same but with one key difference, FWONA shareholders are entitled to one vote per share. For the majority of retail investors, this is not an important factor. However, voting rights allow the shareholder to vote in elections for the board of directors and on proposed operational changes (mainly changes in aims and goals, although sometimes more fundamental structural changes).
Formula One Group Series B (OTC: FWONB) stock is unlisted and is only available over-the-counter (OTC). A share of this stock entitles the holder to 10 votes per share. 97% of these owned shares are held by insiders of the company. OTC stock is often riskier and more complicated to buy than those listed on a major exchange.
This is the more popular stock for retail investors to choose out of the three. This stock has no voting rights for shareholders, meaning it is a fuss-free way for those who are interested in Formula One but not overly pushed to have a say in the business. This is merely a way to invest in an exciting and fast-paced sport.
The simplest and most hassle-free to buy are the Formula One Group Series C shares, FWONK. Unless you are planning on taking a vested interest in the Formula One Group company, then voting rights are not an important factor. Just sit back, relax and earn some money whilst you watch the tournament as it continues to travel around the world.
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