The 2022/23 Premier League season kicked off at the beginning of August last year and Manchester United (NYSE: MANU) started dreadfully. After two games, they were bottom of the league. Yet the team managed to turn it around and performed much better as the season wore on. Manchester United shares did something similar.
Having started the season at $11.55, they ended it 64% higher at $18.97. However, over the last month, they’ve soared to $24.57 as the drawn-out takeover of the club appears to be nearing its end game.
So, how much would a $5,000 investment made in Manchester United stock at the start of last season be worth today?
The shares have doubled
Since the first weekend of August last year, the share price has risen 111%. That means my $5,000 investment would have grown to around $10,550 today. One negative is that I wouldn’t have received any income on top, as the dividend was cancelled last year.
Still, this would have been an exceptional investment, and I’m a bit frustrated with myself for not initiating a position. That’s because I looked into the stock a couple of years back, thinking the club may have been undervalued.
However, the team wasn’t winning trophies back then. And I wasn’t confident the club’s owners, the Glazer family, would sell it anytime soon.
Today though, months after the owners signaled that they were open to offers, the club appears close to being sold. It is expected that any sale would value Manchester United at around £5bn.
British billionaire Sir Jim Ratcliffe, founder and chair of chemical giant Ineos Group, is vying with investors from Qatar to purchase the club.
Results
In its recent financial Q3, the company reported overall revenue of £170m, an 11.3% increase over the previous year. And it boasted record match day attendance last season, with the club selling a cumulative 2.4m tickets.
Management also said that its 360,000 global members at the close of the 2022/23 season made it the largest paid membership program in world sport.
Looking forward, the company is set to receive higher broadcasting revenue once it returns to the elite UEFA Champions League competition next season.
This helped it raise its previous revenue guidance from £590m-£610m to a record £630m-£640m. And it raised its adjusted EBITDA guidance to as much as £150m from a previous high of £140m.
Would I buy the stock?
Unfortunately, I think new investors would be late to the party here. Most of the juicy gains are probably gone. However, the share price could still go higher if a sale is actually confirmed.
It’s thought the seven-month-long takeover saga is still rumbling on because the owners are holding out for more than £5bn. If that valuation isn’t met, there’s a risk they could refuse to sell, prolonging their 18-year ownership of the club.
That would be deeply unpopular with most fans and would probably cause massive volatility in the share price. While I do think a takeover agreement will be reached, the stock is too risky for me at today’s price. So I’ll be watching developments play out from the touchline.
