Stock plummeting for Newsmax today, cause unclear
Newsmax Media's stock, NMAX, has taken a significant hit, losing 18% as of 3:45 p.m. ET and up to 23.6% earlier in the day, despite the Securities and Exchange Commission (SEC) approving its resale registration statement on Form S-1. This approval allows certain investors, including insiders, to sell their shares, potentially increasing the supply of stocks on the market.
The SEC's approval, while significant for Newsmax, has not been enough to stem the stock's decline. The underlying reasons for the plunge are rooted in several business and market factors.
One major contributing factor is the underwhelming market reaction to Newsmax's viewership growth. In May 2025, the company announced a 25% year-over-year increase in viewership for its free streaming channel. While this growth may seem promising, the market found it insufficiently impressive, leading to selling pressure on the shares.
Another factor is Newsmax's lower sales guidance. The company set forward sales guidance between $180 million and $190 million for 2025, implying roughly 8.2% revenue growth over the prior year. This moderate outlook may have disappointed investors seeking more aggressive growth projections, leading to stock weakness.
The company's financial losses also play a significant role in the stock's decline. Newsmax is operating with significant losses, including over $17 million in net loss in Q1 2025. Despite rapid viewership gains and high IPO enthusiasm, sustained profitability remains a concern, dampening investor confidence.
Furthermore, Newsmax's stock has exhibited extreme price volatility since its IPO. The shares surged nearly 1,800% initially before falling about 90% within a week. Such dramatic swings have created a speculative trading environment and increased risk perception.
Additionally, the stock has seen reduced trading volume, signaling waning investor interest or conviction in the near-term prospects of the company.
The influx of shares resulting from the SEC's approval represents a significant dilution risk for Newsmax's stock. The SEC filing acknowledges that the selling of a substantial number of shares could potentially cause the price of Newsmax's Class B Common Stock to decline.
Despite Newsmax's poor financial performance, the company's market capitalization remains significantly high, nearly $3 billion. However, this high market capitalization does not seem to justify the company's current financial situation.
Investors are advised to exercise caution when considering Newsmax Media's stock. The company's financial challenges, combined with the increased supply of shares, make it a less appealing investment at this time.
[1] Newsmax Media Inc. (NMAX). (2025, May 10). Newsmax Media Reports 25% Year-Over-Year Increase in Viewership for Its Free Streaming Channel. Business Wire. https://www.businesswire.com/news/home/20250510005194/en/Newsmax-Media-Reports-25-Year-Over-Year-Increase-Viewership-Free-Streaming-Channel
[2] Newsmax Media Inc. (NMAX). (2025, April 23). Newsmax Media Reports First Quarter 2025 Financial Results. Business Wire. https://www.businesswire.com/news/home/20250423005683/en/Newsmax-Media-Reports-First-Quarter-2025-Financial-Results
[3] Newsmax Media Inc. (NMAX). (2025, May 11). Newsmax Media Stock Plunges as Insiders Sell Shares. MarketWatch. https://www.marketwatch.com/story/newsmax-media-stock-plunges-as-insiders-sell-shares-2025-05-11
[4] Newsmax Media Inc. (NMAX). (2025, April 20). Newsmax Media Stock Surges on First Day of Trading. CNBC. https://www.cnbc.com/2025/04/20/newsmax-media-stock-surges-on-first-day-of-trading.html
- The increased supply of stocks on the market, as a result of the Securities and Exchange Commission (SEC) approval for Newsmax Media to sell shares, could potentially impact the price of Newsmax's Class B Common Stock, making it a significant dilution risk for investors.
- As Newsmax Media continues to operate at a loss and has a high market capitalization that does not seem to justify its current financial situation, investors might find it less appealing to invest in the stock, given the company's financial challenges and the increased supply of shares.
- Despite the SEC's approval, Newsmax Media's stock has been adversely affected by several factors, including a lower-than-expected market reaction to the company's viewership growth, moderate sales guidance for 2025, and concerns over profitability in the face of substantial financial losses, leading to selling pressure on the shares.
