As the Formula One racing season enters its summer break, Wall Street analysts are buzzing with optimism about the motorsport league's parent company, Liberty Media Formula One (FWONK). Despite reporting a nearly 40% year-over-year revenue dip in the second quarter, primarily due to race cancellations linked to geopolitical conflict in the Middle East, the stock saw a nearly 4% rise on the day of results. The company's resilience is partly attributed to ongoing media rights negotiations, including a recent multi-year agreement with the surface TV industry.
While sports spending and viewership have largely held firm against rising inflation – exemplified by the 2026 FIFA World Cup setting a record $15 billion in revenue – F1 has slightly lagged behind other sports entertainment giants. For instance, TKO Group Holdings (UFC and WWE) has climbed 16% in the last 12 months, and Madison Square Garden Sports (New York Knicks) has soared 93%, whereas F1 has seen only marginal movement in the same period.
However, analysts are forecasting a strong turnaround. JPMorgan's David Karnovsky, who holds a 'buy' rating, highlighted positive management commentary on Formula 1’s commercial prospects, particularly in sponsorship and licensing. He anticipates continued momentum, with 2027 EBITDA benefiting from a full race calendar and new additions like the Turkey Grand Prix, and expects leverage to decrease, potentially paving the way for capital returns.
Morgan Stanley's Sean Diffley echoed this sentiment in a July 29 note, maintaining an 'overweight' rating and boosting the price target to $125 from $120, suggesting a 21% upside from Friday's closing. Diffley emphasized F1's significant untapped potential, especially in key markets. He noted that the sport remains 'under-penetrated and under-monetized' in the highly lucrative U.S. market and the rapidly expanding Asian market, particularly China, where companies like BYD could show strong interest.
A critical growth vector, according to Diffley, is the 'Licensing & Consumer Products opportunity.' He believes this segment has the capacity to rival traditional partnerships and could double or even quadruple in the coming years, though it would require additional investment.
F1's popularity explosion began after Liberty Media's acquisition in 2017, when the sport faced declining viewership. Strategic partnerships, most notably the 2019 collaboration with Netflix for the docuseries 'Drive to Survive,' reignited interest, leading to a 63% increase in viewership by mid-2025 compared to 2018. The success of Apple TV's F1 Movie has further propelled its growth.
Bernstein analyst Ian Moore, with an 'outperform' rating, projects sponsorships alone could generate over $1 billion by FY2027 and approximately $1.2 billion by FY2028, representing about 30% of primary revenue, a substantial leap from the ~$268 million base when Liberty took over in 2017. Moore also identified a credible path for licensing royalties to grow from an estimated $80-150 million today (anchored by deals with LEGO, Mattel, Disney, EA, and the F1 Movie franchise) to $175-310 million by 2028.
