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Dover Motorsports called ‘perfect coronavirus stock’ by analyst

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A market analyst has described Dover Motorsports (NYSE: DVD) as a “perfect coronavirus stock” saying he believes the stock will rebound “because NASCAR is not going anywhere.”

“Once the coronavirus has been dealt with, everything NASCAR will return to normal,” said Mariusz Skonieczny of Classic Value Investors in a report dated April 27.

Tens of thousands of fans attended the Monster Energy NASCAR Cup Series Drydene 400 at Dover International Speedway | PHOTO COURTESY OF NASCAR/MATT SULLIVAN/GETTY

The report came out just a few days before Dover Motorsports reported its normal first quarter loss, due to the seasonality of its business. The problem for the Dover-based company is that its May NASCAR race and June Firefly festival during the second quarter have been postponed and cancelled respectively.

Before the coronavirus, Dover Motorsports was trading for $2 per share, nearly double its 52-week low of $1.06 per share just a few days before the report was issued. It closed April 29 at $1.30 per share, and Skonieczny said he expects the stock price to recover back to $2 per share.

Dover Motorsports said April 30 that it had a net loss in the first quarter of 2020 of $3.14 million, compared with a loss of $2.49 million a year earlier. The 2020 first-quarter loss included $341,000 in grandstand removal costs, which will ultimately impact race revenues.

Skonieczny said Dover Motorsports is the “perfect” coronavirus stock “because the company hosts NASCAR races where 100,000 fans can gather to infect each other while watching their favorite drivers compete for trophies. Consequently NASCAR, a private organization, postponed all the races.”

Dover Motorsports hosts six NASCAR events, with the two Sunday-afternoon Monster Energy NASCAR Cup Series events in May and October the only ones that matter from a revenue standpoint. The company also owns the Nashville Superspeedway in Tennessee.

“Having the right to hold a NASCAR Cup Series event is like having a money-printing press,” Skonieczny said. “You can’t just build a racetrack and invite NASCAR drivers to race there. All races have to be sanctioned by NASCAR. Track owners like Dover Motorsports have three primary revenue sources: race fans, sponsors, and television networks.”

Dover Motorsports is the only publicly traded entity left in the NASCAR realm.

By Peter Osborne

[email protected]

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