Market Sentiment Around Loss-Making Formula One Group (NASDAQ:FWON.K)

We feel now is a pretty good time to analyse Formula One Group's (NASDAQ:FWON.K) business as it appears the company may be on the cusp of a considerable accomplishment. Formula One Group engages in the motorsports business. The US$11b market-cap company announced a latest loss of US$596m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Formula One Group's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Formula One Group

According to the 9 industry analysts covering Formula One Group, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$43m in 2022. So, the company is predicted to breakeven just over a year from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 106% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Formula One Group's upcoming projects, however, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Formula One Group is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Formula One Group's case is 57%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of Formula One Group to cover in one brief article, but the key fundamentals for the company can all be found in one place – Formula One Group's company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

1. Valuation: What is Formula One Group worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Formula One Group is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Formula One Group’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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