Despite a 40% revenue dip in Q2 due to canceled races, Formula One’s parent company, Liberty Media Formula One, saw its stock rise 4% as analysts forecast significant upside. Experts point to untapped commercial opportunities in key markets like the U.S. and Asia, strong media rights renewals, and burgeoning sponsorship and licensing deals, fueled by popular docuseries and films, as key drivers to propel the motorsport stock ahead of its rivals.
While the Formula One season takes a summer pause, financial analysts are forecasting a significant upside for the motorsport league's parent stock, Liberty Media Formula One. The company recently reported a nearly 40% year-over-year revenue decline in its second-quarter results, attributed to the cancellation of several races due to ongoing conflict in the Middle East. Despite this setback, the stock saw a nearly 4% increase on the reporting day, bolstered by the company's announcement of active media rights negotiations and recent multi-year renewals with the surface TV industry.
Amidst rising inflation, consumer spending and viewership in the sports sector have largely remained robust. Illustrating this trend, the 2026 FIFA World Cup emerged as the year's most-watched sporting event, generating a remarkable $15 billion in revenue. Other sports entertainment companies have also experienced substantial gains; TKO Group Holdings, the parent company of UFC and WWE, has climbed 16% over the past 12 months, and Madison Square Garden Sports, owners of the New York Knicks, has soared an impressive 93%. In contrast, F1 has marginally lagged these peers during the same period.
However, analysts are confident that F1's stock is poised for accelerated growth. JPMorgan analyst David Karnovsky, holding a 'buy' rating, recently noted, "Sentiment has firmed up recently, we think due to positive management commentary on the commercial opportunities across Formula 1, in particular for sponsorship and licensing. We expect momentum can continue, noting 2027 EBITDA will benefit from a full calendar and new races (e.g., Turkey), while growth and cash build should push leverage down to levels where capital return starts to come into view."
Morgan Stanley reiterated its 'overweight' rating in a July 29 note, elevating its price target for F1 stock from $120 to $125, signaling a potential 21% upside from Friday's closing price. Analyst Sean Diffley emphasized the sport's vast untapped potential, particularly in the most lucrative sports market globally, the U.S. (where he notes 'most people can't name 3 drivers'), and the rapidly expanding Asian market, especially China, where he believes companies like BYD would be keen to engage with the sport.
Diffley highlighted licensing and consumer products as one of the most 'underappreciated growth vectors,' predicting it could one day rival partnerships and potentially double or even quadruple over the coming years, albeit requiring incremental investment. The strategic partnerships and deals forged by Formula One have been instrumental in its surge in popularity. Following Liberty Media's acquisition in 2017, the league was grappling with declining viewership. A pivotal moment came in 2019 with the partnership with Netflix, leading to the creation of 'Drive to Survive,' a docuseries offering an exclusive behind-the-scenes look. By mid-2025, viewership had surged by 63% compared to 2018, with further growth following the success of Apple TV's F1 Movie.
Bernstein analyst Ian Moore also maintains high expectations, assigning an 'outperform' rating to the stock. In a July 28 note, he projected sponsorships to generate over $1 billion by FY2027 and ~$1.2 billion by FY2028, maintaining approximately 30% of primary revenue, a significant leap from the ~$268 million base when Liberty took control in 2017. Moore stated, "We continue to see sponsorship approaching ~$1.1B by FY2027 and ~$1.2B by FY2028, holding roughly 30% of primary revenue, against a ~$268M base when Liberty took control in 2017." He further added, "We see the sponsorship compressed-lag thesis continuing to prove out: six league-level deals were signed before Apple's first US race aired, and Marsh closed the insurance whitespace we flagged in May." For licensing, Moore estimated an $80-150 million royalty base today, anchored by deals with LEGO, Mattel, Disney, EA, and the F1 Movie franchise, with a credible trajectory toward $175-310 million by 2028.
