Newsmax Inc. (NMAX) Rating Upgrade: Possible Short-Term Gains, Likely Long-Term Slide.

The article discusses Newsmax Inc.'s stock performance since a previous sell rating in June, which has declined by 18%. Despite some short-term gains, the author predicts a long-term slide due to a rating upgrade. The author attributes the decline to a slow and steady decline, but notes that the company has enjoyed some gains along the way. The author's previous sell rating was based on their assessment of the company's financial performance and market trends.

Newsmax Inc. (NYSE:NMAX) has been on a rollercoaster ride since receiving a sell rating in June. The stock has slid by 18% since then, with a slow but steady decline punctuated by periodic bounces. Despite these fluctuations, the long-term outlook remains negative due to fundamental challenges and high valuation, as detailed in a Seeking Alpha rating upgrade.

The recent decline can be attributed to several factors. First, traditional media, which Newsmax relies on for revenue, is in decline as the baby boomer population shrinks. Additionally, Fox News (FOX) is a strong competitor and has regained President Trump’s approval. Newsmax’s real value, under generous assumptions, is estimated to be around $4, making it an expensive stock by many metrics, according to the Seeking Alpha analysis.

However, Newsmax has experienced short-term gains due to various catalysts. For instance, the stock surged after announcing a deal with the Trump Media and Technology Group (DJT) and later after settling the Dominion lawsuit. More recently, the stock rose over 1.5% in premarket trading after an announcement of a crypto reserve plan, which includes purchasing up to $5 million worth of Bitcoin (BTC-USD) and Trump Coin (TRUMP), as reported in an inkl article.

The midterms approaching could provide additional support for Newsmax. The company expects revenues to top $180 million in 2024, driven in part by political campaign ad spending. This could lead to a strong bump through the midterms, the Seeking Alpha piece notes.

Newsmax's management team recognizes the need for diversification and is actively pushing into newer media channels like podcasting and YouTube. However, these moves may not be enough to sway the rating to buy territory due to high production costs and the company's high valuation, the Seeking Alpha report concludes.

In summary, while Newsmax presents an interesting but risky investment opportunity, investors should approach it with caution. The stock may continue to experience short-term gains due to catalysts, but the long-term trend is expected to remain negative. Investors should consider this as a high-risk, short-term trading opportunity rather than a long-term investment.