Newsmax, a conservative cable network that provides news, launched on the New York Stock Exchange Monday. Its explosive debut defied market trends.
The stock, which was initially priced at $10 a share and traded under the symbol NMAX, opened trading at $14.
It had already risen more than 500% by midday in volatile trading. This prompted comparisons with past speculative frenzy seen in meme stocks.
This IPO, which raised $75m through the sale 7.5m Class B shares in the US was a rarity. It marked the first time a television network went public.
According to Dealogic, no similar cable news IPOs have occurred in the last decade.
Newsmax is listed at a moment when streaming platforms are putting increasing pressure on traditional cable TV.
Live sports and news continue to attract a large audience, which makes them attractive advertising targets.
In recent years the network has seen a significant increase in its audience, largely due to Donald Trump’s rise and that of other right-wing politicians.
NMAX is a popular investment for retail investors
Retail traders were quickly attracted by the dramatic rise in Newsmax stock prices.
On social media and online forums, such as Reddit, a number of people compared the price to GameStop’s rally in 2021.
Reddit users commented on the fact that Newsmax stocks were “sent to space,” in reference to the speculation that pushed struggling companies like GameStop, AMC Entertainment and AMC to record highs.
Retail traders have not been deterred by institutional investors’ caution about Newsmax.
According to filings with the regulatory authorities, the network lost more than $55 million on revenues of 80 million dollars in 2024’s first half.
The total assets and liabilities are $142 millions.
Newsmax stock’s surge mirrors previous IPO booms, which saw initial sky-high values collapse with time.
Analysts have noted that for two dozen similar companies, the IPO price has fallen an average of 85% since their debut.
Fox News has a new competitor
Christopher Ruddy (founder and CEO of Newsmax) described the IPO in a way that would position Newsmax as a rival to Fox News.
Ruddy, who appeared on CNBC’s “Squawk box” on Monday, said: “I believe there was demand for greater competition against Fox.”
He said that, while Fox dominates the right-wing media landscape, Newsmax has carved its own niche as fourth largest cable news network, behind CNN, MSNBC and Fox News.
Newsmax is consistently ranked fourth among cable news networks, according to Nielsen ratings. It also ranks in the top twenty cable channels for both daytime and primetime ratings.
Newsmax began in 1998 as an online news source before becoming a cable network in 2014.
By obtaining licensing fees from pay-TV companies, the company’s revenue model has been boosted.
It resolved the dispute in 2023 with DirecTV which briefly dropped Newsmax due to fee negotiation.
Analysts question long-term viability
Analysts warn that Newsmax’s business model is not without its challenges, despite the initial frenzy.
As more people stream content, traditional cable news networks are struggling to maintain their subscriptions.
Fox News, CNN and MSNBC are diversifying their offering, while Newsmax is still heavily dependent on cable distribution.
It has been questioned whether the company is pro-Trump.
Newsmax settled with Smartmatic for $40 million last year over false allegations that the company had rigged 2020 elections.
Ruddy, however, tried to minimize Newsmax’s political leanings at the IPO.
He said, “We consider ourselves conservatives with an independent mission of news and we ask hard questions to the Trump Administration.”
Trump called Ruddy personally to discuss Newsmax’s future after the market debut.
Ruddy posted on social media that they had discussed the IPO. He added: “I told Potus about my new saying, ‘A rising Trump raises all boats’.”
What is the post-Trump effect? Newsmax stock rises by 500% in its NYSE debut, as demand for right-wing media surges. This may change as new information unfolds
