Why Did Newsmax Plunge 20.83% After IPO Rally?

Newsmax's stock price dropped by 20.83% in pre-market trading on April 2, 2025, marking a significant decline after its recent IPO.

Newsmax Inc.'s IPO experienced a remarkable two-day rally, but the current valuation appears unsustainable, trading at 162 times last year's revenue. This high valuation raises concerns about the company's financial health and sustainability.

Newsmax Inc. recently went public with an IPO, issuing 7,500,000 shares at $10.00 per share. The stock opened at $14 after being priced at $10 per share, and by midday, it had soared more than 500% in volatile trading. This dramatic increase in stock price can be attributed to the "Trump effect," as the company's association with conservative media has garnered significant attention and investment.

Despite strong revenue growth and no debt, Newsmax's cash burn and operating losses pose some short-term financial challenges. The company's Class B Common Stock began trading on the New York Stock Exchange under the symbol “NMAX” soon after the market opened, and the stock price has since fluctuated significantly.