From MAGA to Margin Call: Newsmax’s Wall Street Whiplash
From a $10 IPO to a $20B valuation — and back down 40% overnight. Inside the speculative surge and sudden reality check for Newsmax.
Editorial Team (ET)May 25, 2025
Newsmax, the conservative cable news outlet often branded as a Fox News alternative, has just delivered one of the most dramatic IPO rollercoasters in recent memory. On Wednesday morning, its shares nosedived by over 40%, wiping out tens of billions of dollars in market capitalization just days after a euphoric post-IPO surge pushed its valuation to more than $20 billion.
At one point this week, Newsmax stock soared from its IPO price of $10 to a staggering $233 — a meteoric rise that defied logic and raised eyebrows across Wall Street. On Tuesday alone, the stock jumped 180%, following a 735% leap the previous day. Yet by Wednesday morning, reality hit hard: the stock opened at $155.18 and quickly plunged over 33%, reflecting what many analysts now describe as a classic case of irrational exuberance.
Trump Ties and Meme Stock Momentum
Founded in 1998 by Christopher Ruddy, a media mogul and long-time friend of former President Donald Trump, Newsmax has always positioned itself as a megaphone for conservative voices. It’s no surprise, then, that the “Trump trade” appears to have supercharged its public debut. For a segment of retail investors, Newsmax isn’t just a news outlet — it’s a proxy for political loyalty, cultural identity, and anti-establishment defiance.
This same phenomenon drove Trump Media & Technology Group (DJT) to wild valuations earlier in 2024, and the similarities are hard to ignore. In fact, trading in Newsmax stock was halted several times this week due to extreme volatility — echoing the chaos of the 2021 meme-stock saga involving GameStop and AMC. Much like those episodes, Newsmax’s rally was fueled not by fundamentals but by fervor.
Behind the Hype: A Bleeding Business
The cold, hard numbers paint a very different picture than the stock chart. Newsmax, for all its ideological appeal, remains an unprofitable company. According to its recent 10-K filing with the SEC, the media firm brought in $171 million in revenue in 2024 — a solid 26% jump from the previous year — but it also posted a net loss of $72 million, a 73% increase in red ink.
The company further disclosed “material weaknesses” in its financial reporting controls. In plain terms, that means there’s a chance its financial statements could be materially misstated — and worse, Newsmax might not be able to catch the errors quickly. That sort of risk typically sends institutional investors running, but in this case, speculation outpaced caution.
IPO Cash and Risk Factors Galore
Newsmax raised $75 million in its IPO on Friday, a modest figure by Wall Street standards. Combined with the $225 million it pulled in from a private offering in February, the company was sitting on a decent war chest heading into its market debut. But that doesn’t change the fact that it’s facing numerous headwinds.
Chief among them is legal liability. Newsmax is currently being sued by Dominion Voting Systems for $1.6 billion over false election-related claims aired in the aftermath of the 2020 U.S. presidential election. The lawsuit looms large in the company’s SEC filings, listed prominently as a material risk. Newsmax has already paid $20 million as part of a $40 million settlement with another election tech firm, Smartmatic, stemming from similar allegations.
A Valuation Detached From Reality
Before the collapse on Wednesday, Newsmax’s market capitalization surpassed that of News Corp — the parent company of The Wall Street Journal — and even eclipsed that of Super Micro Computer (SMCI), a major AI server manufacturer. At its $20.8 billion peak, Newsmax was being valued more richly than companies with far more revenue, profitability, and tangible assets.
This valuation disconnect was, perhaps, the most glaring red flag. With no profits and mounting legal troubles, Newsmax’s price-to-earnings ratio wasn’t just high — it was non-existent. Yet for two consecutive days, retail investors ignored the fundamentals, caught up in the spectacle of a media company riding the wave of political fervor and cultural identity.
Wednesday’s Crash: The Inevitable Reckoning
All of that enthusiasm came crashing down when shares plunged over 40% by mid-morning on Wednesday. The company’s market cap was instantly slashed to $12.7 billion, erasing more than $8 billion in value. Trading volume remained high, but the sentiment had clearly shifted from euphoria to panic.
Meanwhile, DJT — another stock often buoyed by Trump-aligned investors — fell more than 8% during the same session, signaling that the market may be starting to take a more skeptical stance toward politically hyped equities.
The Broader Picture: Political Media and Public Markets
The Newsmax IPO saga reveals more than just market volatility — it shines a light on how deeply politics has infiltrated financial markets. In today’s landscape, a company’s valuation can skyrocket not because of its earnings or innovation but because of its perceived alignment with a movement or personality.
This trend raises difficult questions. Should politically charged companies go public if they can’t stand up to financial scrutiny? And what responsibility do exchanges like the NYSE have in protecting investors from speculative manias tied to ideology rather than performance?
Newsmax’s Next Chapter
What happens now is anyone’s guess. Newsmax may stabilize and settle into a more reasonable valuation range, or it could see continued volatility as retail traders, short-sellers, and media coverage keep the spotlight firmly on its stock.
The company still faces a steep uphill climb — from proving it can become profitable, to resolving its legal issues, to tightening its financial reporting practices. For now, it serves as both a media empire and a cautionary tale, its ticker symbol a beacon for both believers and skeptics alike. One thing is clear: Newsmax isn’t just fighting for viewers. It’s now fighting for investor trust.
Conclusion
The meteoric rise and fall of Newsmax stock is a modern market parable — a blend of hype, politics, and speculation with little regard for financial fundamentals. While the Trump connection and media spotlight created a perfect storm for a historic rally, Wednesday's crash exposed the risks of investing in emotion rather than earnings. As Newsmax charts its post-IPO course, the broader market would be wise to reflect on what truly drives value — and what merely inflates it.
