Is Newsmax Stock a Buy Now?

Newsmax (NYSE: NMAX), a media company with conservative leanings, was founded in 1998 and has grown rapidly over the past decade with the rise in popularity of Donald Trump. Newsmax's stock went on a wild ride after its initial public offering (IPO) on March 31, 2025. It went public at $10, started trading at $14, and ended its first day at $83.51. That's a stunning 735% one-day gain. The following day, the stock price nearly tripled to a record closing price of $233.

At its peak, Newsmax's market cap reached $29 billion, or nearly 170 times the $171 million in revenue it generated in 2024. That meme stock valuation was unsustainable, and Newsmax's price withered to about $18 a share now and reduced its market cap to $1.6 billion.

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Should investors buy this volatile stock after its steep pullback?

Image source: Getty Images.

What does Newsmax do?

Newsmax is a media company with a basic cable channel, an OTT channel, and a website, generally known for its right-leaning coverage (which it refers to as independent news coverage). It is popular among President Trump's supporters, and it has a reputation as an alternative to bigger mainstream media platforms. It's also been criticized for providing a platform for those interested in publicizing conspiracy theories regarding the 2020 elections, the January 6 attack on the U.S. Capitol, and alleged detrimental effects of COVID-19 vaccines.

Newsmax's core business model isn't too different from other traditional media companies. Its original linear TV business, which it launched in 2014, operates Newsmax TV as a 24/7 cable news channel that reaches around 33 million viewers per month. The channel generates most of its revenue from ads and cable license fees.

Its newer digital media business -- which delivers its content across its website, apps, and social media channels -- reaches roughly 17 million viewers per month. This segment generates its revenue from ads, subscriptions to its ad-free Newsmax+ platform, and its online sales of various products. Its smaller publishing division sells books and magazines.

In its latest quarter, the company generated 64% of its $45.3 million in revenue from its ads, 16% from its affiliate fees, 15% from its subscriptions, and 4% from its product sales. But it's still tiny compared to mainstream media companies, which usually generate billions of dollars in annual revenue.

How fast is Newsmax growing?

In 2023, revenue stayed roughly flat at $135 million as it posted a net loss of $42 million. In 2024, its revenue rose 26% to $171 million -- but its net loss widened to $72 million.

In 2024, top-line growth was driven by three core catalysts: its rising viewership rates ahead of the U.S. elections, the expansion of its streaming media platform, and higher affiliate fees. Newsmax also settled a defamation lawsuit in 2024 by electronic voting systems maker Smartmatic for $40 million over Newsmax's false claims regarding vote alteration and manipulation in the 2020 presidential election. The lawsuit had alleged that Newsmax broadcast damaging misinformation about Smartmatic purposefully. Newsmax argued it was reporting on newsworthy allegations made by Trump and his supporters.

The settlement, along with the expansion of its tech infrastructure and higher programming expenses to support its rising viewership rates, compressed Newsmax's operating margins and resulted in wider losses. Newsmax also faces additional litigation from Dominion Voting Systems regarding allegations of defamation and false claims of voter fraud.

In the first quarter of 2025, revenue rose 12% year over year as Newsmax narrowed its net loss from $51 million to $17 million. However, that bottom line improvement is largely attributed to an easy comparison to a quarter that included large legal expenses.

Newsmax's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- which excludes the legal noise from both periods -- still dropped $4.4 million to negative $1.2 million as it continued to ramp up its spending on its programs and tech infrastructure.

Why did Newsmax stock skyrocket and sink?

The company's growth isn't too impressive, but the limited amount of shares offered during its IPO (about 6% of its total shares), its close association with President Trump, and the volatile meme stock trading dynamics fueled its initial rally. Its share price movement is similar to what happened to Trump Media & Technology Group, the owner of the right-leaning social network Truth Social, after it went public by merging with a special purpose acquisition company (SPAC) last year. But just like Trump Media, Newsmax's stock quickly lost its luster as its initial investors cashed out.

In a recent Securities and Exchange Commission filing, Newsmax said it would soon allow some of its earlier investors to sell up to 121 million shares on the open market -- compared to its 89 million outstanding shares on the market today. That massive share dilution could further reduce the value of its current shares.

Is there any reason to buy Newsmax today?

Newsmax stock still doesn't look cheap, trading at 9 times last year's sales. Its costs will continue to rise, it faces unpredictable legal challenges, and its financials won't come close to breakeven anytime soon. The stock's volatile swings might attract some short-term traders, but Newsmax definitely isn't a stock for long-term investors to buy and hold at this time.

Should you invest $1,000 in Newsmax right now?

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.