Topline
In the third act of its dramatic debut as a public company, conservative media company Newsmax faced a harsh reality as its stock lost a sizable chunk of its early gains, though it remains valued favorably compared to comparable companies, with one notable exception: The parent of President Donald Trump’s Truth Social.
Even after crashing down to earth Wednesday, Newsmax is still valued at an extreme premium compared … More
Key Facts
Shares of Newsmax tanked as much as 50% to below $120 by late morning Wednesday before recovering slightly to a 45% loss, shedding more than $10 billion in value as its market capitalization dropped from $20.7 billion to $11 billion, according to Yahoo Finance.
Newsmax stock is still up about 1,200% from its initial public offering price of $10.
As such, Newsmax’s valuation remains far loftier than the typical stock’s compared to the company’s financial performance.
In 2024, Newsmax reported a $72 million net loss on $171 million of revenue, meaning its price-to-sales ratio is a sky high 63.9 (the commonly used price-to-sales ratio compares Newsmax’s $11 billion market capitalization to its last 12-month sales).
The S&P 500’s average price-to-sales ratio is 2.9, according to FactSet, meaning that Newsmax enjoys a more than 22 times premium compared to the average stock listed on the bellwether U.S. stock index.
How Newsmax Compares To Fox And Other Media Stocks
Newsmax made waves Tuesday when it briefly surpassed Fox Corp, parent of its top competitor in right-wing media in Fox News, in terms of market value, perhaps a surprise considering Fox’s far more robust financials. Fox made $2 million on $15 billion of revenue last year, and its 1.7 price-to-sales is 2.7% of Newsmax’s. Other pure play media stocks like the New York Times (3.2 price-to-sales) and local television titan Nexstar Media (1.1 price-to-sales) also enjoy far less friendly valuations than Newsmax, which is still worth more than those two profitable companies. But one company which fetches a far loftier valuation than Newsmax is Trump Media & Technology Group, majority owned by the president. Trump Media has a market cap of $4.5 billion despite losing $400 million on $4 million in revenue last year, equating to a price-to-sales of 807.
Contra
Chris Ruddy, Newsmax’s billionaire founder and CEO, told CNBC on Monday “we see ourselves as a growth stock,” helping explain why investors flocked to Newsmax shares other than meme stock momentum. To Ruddy’s point, Newsmax revenue jumped more than 25% from 2023 to 2024. It’s also common for newly public companies to fetch high relative share prices shortly after their IPO as investors bet a company can grow into its valuation. For example, Facebook profited just $670 million off of $3.7 billion in sales during 2011, the final year before its IPO, growing exponentially to a $62 billion profit on $165 billion in sales by 2024.
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