This is How Many F1 Shares £1000 Will Get You
If you’re a sports fan and an investor, there’s a chance you would love to invest in your favorite franchise. Sadly, many sports organizations prefer to stay private, thereby preventing their fans from investing in them.
There are some exceptions, of course. Leading racing league, Formula One is a great example. The company went public in 2017 after its merger with Liberty Media. Should you invest £1000 on F1 stocks? How much value will you get in return?
The Short Answer: £1000 Gets You 32 Shares
Formula One’s stock was trading at an average price of £31 at the London Stocks Exchange and $43 at NASDAQ, US, during the first week of July, 2021. Interestingly, the stock has been hovering between £25 and £35 for the last one year.
All the same, an investment of F1 (FWONA) based on its price in July, 2021, will get you roughly 32 shares: if purchased at a price of £31. If you’re a little bit patient and buy when the stock is trading at £25, you could increase your share count to 40.
Should you buy the stock?
45% Growth Rate in One Year
Formula One might have had a brutal year in 2020: the company’s tickets sales fell 80% in the first six months due to COVID-19. However, things got better in the second part of the year as it got the authority to run races with minimal or no fans.
Despite that, the stock has soared tremendously in the last one year. According to Marketwatch.com, the stock has grown by 45% since July last year. This year, it has soared by 15%. By all means, that’s incredibly growth and a good return for a one-year period.
That being said, there are plenty of better performing stocks out there. So, if you’re not sure what to invest 1000 pounds in but you want a good return in one year, five years or a decade, it’s essential to analyze F1 as a company better.
Think of tech stocks, Bitcoin, cannabis stocks, bonds, ETFS and index funds. Why choose dip your £1000 in F1 and not the alternative stocks?
Great Room for Growth
Formula One operates under a simple business model. The league has 10 teams, 20 drivers and a season that runs for nine months. For the uninitiated, F1 teams are owned by big brands like Red Bull, Mercedes, McLaren, Aston Martin, Ferrari and Williams Racing, to name a few.
The league organizes races in multiple countries around the world. Host countries develop the infrastructure required to organize F1 races—akin to international football. However, F1 collects the money from sponsors and ticket sales and shares it with the teams involved.
In light of that information, Formula One has a lot of room for growth. All it needs is to grow its fan base. Presently, the company has a fan base of roughly 433 million according to research firm, Statista.
F1 has been doing a lot of work to increase this customer base. For example, it now produces a show on Netflix that reviews the league’s previous scene. It captures behind the scenes actions to reach out to a broader audience.
For clarity, F1 is aiming to grasp the audience like it did before 2010. Back in 2006, Formula One has over 600 million people watching its races. The figure then started to spiral down to a low of 350 million in 2017. Gladly, the figure has rise to over 400 million TV viewers per year since then.
New Races and Markets
Formula One has been exploring new markets in the past few years. First, it partnered with EA Sports to create a video game inspired by its league. The video game even has an eSports team sponsored and run by the league.
On the other hand, F1 has been adventuring in new countries. Last year, and this year, it hosted races in Turkey after a long hiatus. This came after its races in Canada were cancelled to fight the pandemic.
Starting next year, Formula One will feature a race in Miami. This is meant to spark interest in the US. Add its new races in the middle east, consideration to race in South Africa again and you have a league doing its best to grow.
A Fair Valuation
You’ve heard people say a stock is overpriced. Formula One isn’t one of them. Sure, it’s $2 billion in debt. And its customer base isn’t as big as it used to be. But the company experienced one of its worst years in 2020. And it has risen from the shambles to host races worldwide again.
The company’s venture in eSports, Netflix deals and partnerships will likely soar its stock price. And due to that, it’s a great stock to buy.
Is there a Better Way to Invest your £1000?
Before you invest your £1000, check around to discover if there’s a place you can earn better returns than F1 can provide. The racing organization’s stock won’t always grow at a rate of 40%.
Think of ETFs. They track some of the largest publicly traded companies in the US and the UK. Historically, the best ETFs have had an annual return of 10%. Over a decade or two decade’s time, the money usually has doubled.
Another option is to leave all the hard work to a Robo Advisor: these are software programs that use AI to find the best stocks for you to invest. This might come as a surprise to some but some Robo Advisors have returned more than 60% in the past five years.
One thousand pounds might not look like a lot of money. But in investment terms, it can bring you a lot of money in the long term. As to whether you should invest £1000 on F1 shares, think hard about it.
There are plenty of alternatives. You can pick better performing stocks. Or you could believe in the racing company and take a risk on it.
Photo by Maxim Hopman on Unsplash