F1 shares: more gains to come after Bahrain boost?

23rd March 2022 07:21

Shares in Liberty Media's Formula One business soared 8% following an entertaining grand prix weekend in Bahrain. Independent analyst Alistair Strang looks at potential for the shares to race even higher this season.

Sometimes, a share can treat investors in a fashion similar to a dog. Not like the UK banking sector, where long suffering traders tend to expect the share to lift a leg. Instead, there’s annoying persistence, trying to call attention to a ball while pretending to sit patiently, eyes moving from your face to the ball and back. For the last week, the Liberty Formula One Group (NASDAQ:FWONK) share price has been emulating our Golden Retriever and a tennis ball, and now, with the race season kicking off, we cannot ignore it any longer.

We’d mentioned this brief video regarding Liberty Media’s income and a thought crossed our mind. Formula One is no longer free to watch in the UK, only available “Live” through the exorbitant portal of Sky Sports. Almost everywhere else in the world, you can subscribe to Liberty Media’s Formula1.com, an excellent Live Streaming service, available substantially cheaper than Sky.

With Liberty Media now five years into their management contract, hopefully the dominance of Sky shall come to an end when contracts are next thrown up in the air. To judge by watching the aforementioned short video, Liberty Media don’t appear to be financially struggling with their vastly lower monthly fee to watch live motor racing.

Listed on the Nasdaq in 2017, Liberty currently are trading around $64.50, the share price appearing impatient to catch attention. The immediate situation suggests above $65 threatens further growth to an initial $71 and a new all-time high. If bettered, this scenario can even propose the potential of a future $77, taking the share price to a level we have some difficulty in calculating above.

Obviously, this doesn’t mean the price cannot go higher, it just implies we’ve run out of numbers from a big picture perspective. Normally, this will suggest some hesitation at the secondary level.

Source: Trends and Targets. Past performance is not a guide to future performance

For everything to go horribly wrong, the share would require crossing the Red line on the chart, ideally with all four wheels (a Formula 1 joke) and currently this demands closure below $58 would justify a degree of panic. Such a calamity would risk creating a situation, where reversal to an initial $52 looks possible with secondary, if broken, down at $48.

For now, we rather suspect Liberty intends to discover a path to the $77 level.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of Interactive Investor. All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang or Interactive Investor will be responsible for any losses that may be incurred as a result of following a trading idea.

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