The shares of conservative news channel Newsmax experienced a dramatic decline of over 70% on Wednesday, marking a swift end to its remarkable ascent as a newly public company. The stock price dropped an astounding 72% during afternoon trading, following an unprecedented surge of 2,230% in the first two days after its debut on the New York Stock Exchange.
At the height of its rally, Newsmax achieved a market capitalization of nearly $30 billion, surpassing that of established media giants such as Warner Bros. Discovery and Fox Corp. This meteoric rise was fueled by a surge of interest from retail investors, many of whom engaged in discussions on online platforms, likening Newsmax to the infamous meme stock GameStop (GME), which made headlines in 2021 due to its speculative trading frenzy.
Newsmax's entry into the public market was facilitated through a Regulation A offering, a less conventional route compared to a traditional initial public offering (IPO). This type of offering allows smaller companies to raise funds without navigating the comprehensive registration process required by the U.S. Securities and Exchange Commission. The primary aim of such offerings is to attract retail investors. In this instance, the offering reached approximately 30,000 retail investors.
One significant factor contributing to the volatility of Newsmax's stock is its limited float. Less than 6% of Newsmax shares—approximately 7.5 million out of a total of 128 million fully diluted shares—are available for public trading. This restricted availability has made the stock more susceptible to rapid price changes, particularly in the wake of heightened speculation.
Newsmax has enjoyed increased ratings following the election of former President Donald Trump and other notable Republican figures. Despite this growth, it still trails behind the dominant Fox News in overall viewership. According to Nielsen, Newsmax ranks within the top 20 cable networks for average viewership during both prime time and daytime slots.
The dramatic fluctuations in Newsmax's stock price serve as a reminder of the volatility inherent in the world of public trading, particularly for companies that attract significant retail investor interest. As the media landscape continues to evolve, it remains to be seen how Newsmax will navigate its position amidst established competitors and changing viewer preferences.
