Newsmax, the right-leaning cable news network, has had a rollercoaster ride in the stock market after its recent initial public offering (IPO). Following an unprecedented spike in its stock price in the first two days of trading, the firm suffered a sharp decline, leaving investors and market analysts stunned by the volatility.
Unprecedented Surge and Subsequent Plunge
Newsmax launched on the New York Stock Exchange with its IPO at $10 a share. The stock opened at almost $15, indicating robust opening investor interest. In a dramatic reversal, the stock price soared by around 2,230% in the following two days, closing at $83.51 on the first day and hitting a high of $233 on the second day. This boom brought Newsmax’s market capitalization to almost $30 billion, ahead of entrenched media giants Warner Bros. Discovery and Fox Corp.
But the meteoric climb was brief. On the third trading day, Newsmax shares fell 77.5% to close at $52.71. This precipitous fall erased much of the profit garnered in the early boom.
Factors Contributing to Volatility
A number of contributors to the immense volatility in the stock performance of Newsmax have been identified:
Low Float and Retail Investor Attention: The share availability for trade, coupled with increased retail investor attention, was conducive to behavior similar to that of “meme stocks.” This situation involves swift price swings influenced more by investor sentiment rather than by standard financial metrics.
Speculative Trading: Market analysts have compared Newsmax’s stock trading to other politically aligned stocks, including Trump Media & Technology Group, citing the speculative nature of the trading and the possibility of huge losses among retail investors who participated during the height.
Regulation A Offering: Newsmax used a Regulation A offering for its IPO, which enabled it to raise funds without going through the entire U.S. Securities and Exchange Commission registration process. This method was largely aimed at retail investors, with around 30,000 engaging.
Financial Performance and Market Position
In spite of the early optimism, Newsmax’s financials are challenging. Newsmax posted a $72.2 million loss in 2024, even though annual revenue rose from $135.3 million in 2023 to $171 million in 2024. Newsmax’s market capitalization at its high point was higher than that of Fox Corp., which has much higher revenue and profitability.
Christopher Ruddy, the CEO and founder of Newsmax, maintains significant ownership of the company, holding 39.2 million Class A shares that represent 81% of the company’s voting authority. Ruddy has made Newsmax a viable conservative news outlet with an independent news emphasis.
Market Analysts’ Views
Experts have sounded an alarm on the sustainability of such steep stock appreciation, particularly on the part of businesses whose operations are not profitable. The sudden plunge of Newsmax’s stock price is a reminder of the risks of speculative trading and the need to examine a company’s financials.
Interactive Brokers chief strategist Steve Sosnick had this to say regarding the situation: “This is the latest addition to the pantheon of meme stocks. There has to be some kind of passion to allow investors to ignore fundamentals, and Newsmax qualifies.”
Newsmax’s current stock market activity reflects the volatility that may follow newly public companies, especially those generating notable retail investor attention. The lightning rise and fall underscore the speculative nature of some market dynamics and serve as an investor warning. As Newsmax further finds its place in the media arena, its financial performance and strategic course will be watched intently by stakeholders.
