How to Invest in Formula 1

In 2017, F1 came under the ownership of Liberty Media and became a publicly listed company. However, it is only a tracking stock, enabling investors to focus solely on the Formula One aspect of Liberty Media's business. Since the acquisition, Liberty Media has been committed to expanding the reach of F1, particularly in the United States. According to CEO Stefano Domenicali, F1's popularity has grown substantially since the takeover, with FWONA doubling in value over the last five years.

F1's expansion into the United States has been bolstered by the addition of a second Grand Prix in Miami starting next year, following the establishment of a Grand Prix in Austin in 2012. Despite this growth, however, F1's success in the United States ultimately hinges on the emergence of an American driver. For instance, Christian Pulisic's arrival at Chelsea resulted in his jersey outselling that of Cristiano Ronaldo in the United States. With the sport experiencing so much success, you may be wondering how you can get involved as an investor. In this article we will discuss all the ways in which you can trade Formula 1. It should be noted that even with substantial success, trading any financial assets is always risky and it is important to do extensive research before making financial decisions.

Investing Directly in Formula 1

Formula 1 does not have publicly listed stocks available for purchase. Instead, one can acquire shares in certain parts of Liberty Media, which is the parent company. There are three different types of Formula One Group stocks available for purchase: Series A, B, and C.

1. Formula One Group Series A (FWONA)

FWONA and Formula One Group Series C (FWONK) are fundamentally the same, with one crucial difference: FWONA shareholders have one vote per share. For the majority of retail investors, this distinction is not particularly significant. However, voting rights allow the shareholder to vote in board of directors' elections and proposed operational changes, such as modifications to the organization's aims and objectives or more fundamental structural adjustments.

2. Formula One Group Series B (FWONB)

FWONB stock is unlisted and can only be purchased over the counter (OTC). Each share of this stock provides the holder with ten votes. However, 97% of these owned shares are held by insiders of the company. Investing in OTC stocks can be more complicated and riskier than investing in stocks listed on a major exchange.

3. Formula One Group Series C (FWONK)

FWONK is the most common stock option for retail investors. Shareholders do not have voting rights with this stock, making it a straightforward way to invest in a thrilling and fast-paced sport without being overly involved in the business's decision-making processes.

Investing Indirectly in Formula 1 (Related Stocks)

Another way traders can get involved in F1 this year is by trading stocks that are closely related to the competition. Car manufacturers, sponsors, and other attached stocks may all be catching the eyes of keen investors this racing season. At markets.com we offer a number of CFDs on F1 related stocks to add to your portfolio. However, it is important to note that traders should conduct their own research before making financial decisions and this article does not in any way constitute as investment advice.

1. Aston Martin

One of the most exciting F1 linked stocks right now is Aston Martin. Following a 26 per cent revenue increase first week of Feb 2023 and a third-place finish in the F1 Grand Prix on the 5^th Feb, Aston Martin's shares have soared to new heights on the FTSE 250 on the 6^th Feb. The luxury car maker's shares rose by as much as 22 per cent on Monday morning, as the company announced that it was on track to generate approximately £2bn in revenue by 2024/25.

Despite facing challenges such as cost inflation, delivery delays, and supply chain bottlenecks in the post-pandemic world, Aston Martin's sales have continued to surge, with 80 per cent of its current GT/Sports range sold out for 2023 ahead of upcoming launches. The company attributes this success to its "ultra luxury" strategy, which has resulted in high demand across its portfolio. Although Aston Martin reported a full-year loss of £118m, up from £74.3m year-on-year, it remains optimistic about its future prospects.

2. Ferrari

Another F1 attached stock that is getting attention is Ferrari. Morgan Stanley recently announced that Ferrari has replaced Tesla as its top stock pick among automakers. The investment bank believes that Ferrari investors have been underestimating the company's potential in the electric vehicle (EV) market. According to Morgan Stanley, Ferrari's highly predictable business model and unmatched brand make it an attractive investment opportunity. As a result, the bank sees a 14% upside in Ferrari stock and has raised its price target to $310 per share.

Ferrari has been expanding its line up with new models, including hybrid vehicles, and plans to introduce its first all-electric vehicle by 2025. Morgan Stanley believes that Ferrari's move into the EV market will be a significant growth driver for the company. The investment bank also sees Ferrari as a safer investment than Tesla due to its more predictable earnings and strong brand recognition.

3. Pirelli

The company's success in F1 has been mirrored by its strong financial performance. Pirelli's stock has risen over 30% between September 2022 and March 2023, indicating a positive market sentiment towards the company's future prospects. Furthermore, Pirelli's net profit has increased by over 35% in 2022 to an impressive 435.9 million and Revenues estimated between 6.6 and 6.8 billion euros for this year.

Pirelli, a multinational company based in Milan, Italy, is a leading manufacturer of high-performance tires for cars, motorcycles, and bicycles. Founded in 1872, the company has a rich history of innovation and technological advancements in tire design, which has enabled it to establish itself as a market leader in the automotive industry. Although its F1 partnership may end after 2024, with a longstanding relationship to racing it would not be a surprise if the contract was extended – giving Pirelli more exposure in the coming years.