Why Newsmax Stock Zoomed Almost 14% Higher Today

Newsmax (NYSE: NMAX) reached a notable milestone in its brief existence as a publicly traded company on Monday, and investors reacted by snapping up shares of the stock. It closed the day nearly 14% higher in price, and with that performance absolutely thrashed the S&P 500 index's 0.5% gain.

Maximizing visibility

As of Monday, Newsmax is part of both the Russell 2000 and Russell 3000 indexes. At a stroke this makes the media stock a member of both a prominent small-cap equity tracker, as part of the former index, and a component of an index that includes the largest U.S. companies with the latter.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Inclusion on (or exclusion from, while we're on the subject) an index has little if no direct effect on a company's operations and fundamentals. However there's the phenomenon of "the index effect," in which stocks can get pops simply from the free publicity and higher visibility that comes with joining a well-known index.

To a degree, this is justified. The many index funds that sniff around Russell 2000, Russell 3000, or any one of the many other stock indexes always need to be invested in component stocks. Inclusion automatically makes a company a candidate for such institutional buyers, thereby raising demand for its stock to some extent.

Remember what's important

While Newsmax is surely glad and proud to be part of the two Russells, I should reiterate and emphasize that this development alone shouldn't sway investors toward or away from the company's stock.

It's the fundamentals that ultimately matter, and at the end of the day Newsmax will sink or swim on them. Personally, I'm not captivated by its performance and I wouldn't buy the stock just now, although the business surely has potential.

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

Before you buy stock in Newsmax, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Newsmax wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $713,547!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $966,931!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 177% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Eric Volkman 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.