Newsmax (NYSE: NMAX) stock got hit with another round of big sell-offs in Thursday's trading. The company's share price closed out the day's trading down 10.5% amid the backdrop of a 0.6% decline for the S&P 500 and a 0.9% decline for the Nasdaq Composite.

Sell-offs picked up as the day progressed as investors reacted to tariff and trade issues and other potential macroeconomic risk factors. While there weren't any immediate business factors pushing Newsmax stock lower, the stock may have faced some significant pressure due to news surrounding Tesla and CEO Elon Musk.

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As a network that primarily features right-leaning political content, Newsmax has sometimes been included in the basket of "Trump trade" stocks -- a group of stocks that some investors are betting will see positive catalysts in conjunction with the President's second term. After previously being a high-profile supporter of President Trump, Musk has recently ramped up criticism of Trump and the budget bill he supports. The Trump-Musk schism helped spur a 14.3% sell-off for Tesla stock today, and the pullback effect extended to other "Trump trade" stocks.

Image source: Getty Images.

Is the latest pullback an opportunity to buy Newsmax stock?

In the absence of actual business-specific news pushing Newsmax's share price lower, today's big sell-off could look like an overreaction. The stock is now down roughly 81% from market close on the day of its initial public offering (IPO).

Sell-offs have now pushed the company's market capitalization down to roughly $2.1 billion -- or roughly 12.3 times the $171 million in revenue it reported last year. The company is still growing revenue at a solid clip, with sales rising 12% year over year in the first quarter, but its current valuation still looks somewhat lofty given its rate of sales expansion. Factoring in the potential for the business to face significant negative judgments in outstanding civil suits, I think Newsmax stock still looks too risky right now.

Should you invest $1,000 in Newsmax right now?

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Shares of Newsmax (NYSE: NMAX) are plunging on Thursday. The media company's stock lost 9% as of 3:50 p.m. ET. The steep decline comes as the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) lost 0.3% and 0.8%, respectively.

There isn't a direct catalyst today, so here's a quick analysis of the company's stock.

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Newsmax saw its stock skyrocket nearly 1,800% in the first two days following its recent initial public offering (IPO), before falling roughly 90% over the next week. The conservative media company's viewership has been spiking, leading to the intense excitement around its stock. Newsmax's Q1 viewership jumped 50% year over year, and it is now one of the five most-watched channels in all of cable and the fourth-most-watched cable news channel. Along with its viewership, its revenue has grown considerably as well. The company's revenue jumped 26.4% from 2023 to 2024.

Image source: Getty Images.

There are plenty of reasons to be wary

That's about where the good news ends. The company is operating deep in the red, losing more than $17 million in the first quarter of 2025. Its viewership numbers are also less impressive when you consider that most cable news channels saw comparable major growth over the same period and that its biggest competitor, Fox News, is still miles ahead. All 15 of the most-watched shows on cable appear on Fox. And that 15th-ranked show has 3 times as many viewers as Newsmax's top-ranked program.

Despite this disparity, Newsmax stock carries a price-to-sales ratio more than 8 times that of Fox News' parent company. This seems divorced from reality to me. And if that weren't reason enough to stay away from this stock, Newsmax is facing massive litigation over its false statements regarding the 2020 election. The penalty it could face would potentially bankrupt the company.

Should you invest $1,000 in Newsmax right now?

Before you buy stock in Newsmax, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Newsmax wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $668,538!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $869,841!*

Now, it’s worth noting Stock Advisor’s total average return is 789% — a market-crushing outperformance compared to 172% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of June 2, 2025

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Two stocks that could benefit from President Donald Trump's popularity this year are Trump Media & Technology Group (NASDAQ: DJT) and Newsmax (NYSE: NMAX). The former was launched by Trump in 2021 when he created the Truth Social platform, while the latter features a conservative cable channel that the president has endorsed in the past. Newsmax recently went public, but Trump Media's stock has been around for a little over a year after merging with Digital World Acquisition Corp.

Which of these two stocks is likely to perform better this year and over the long haul?

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The case for Trump Media

Trump Media stock is more closely aligned with President Trump's brand and image. It involves his Truth Social platform and streaming business.

The company has also been looking at crypto as a growth opportunity, recently partnering with crypto.com, which plans to offer exchange-traded funds comprising both digital and non-digital assets. Among the possible ETFs that could soon be available are a "Made in America" ETF and a "Bitcoin Plus" fund. While the details of those funds are not known, Trump Media has applied to trademark investment products with those names.

Trump Media is also well-funded, finishing last year with $777 million in cash and short-term investments. That liquidity can give the business lots of runway to grow even as it's still burning through cash. The company's net sales totaled just $3.6 million last year, but with plans to offer more services and greater opportunities for monetization ahead, there could be strong growth on the horizon for the company.

The case for Newsmax

Shares of Newsmax went public last month and at a market cap of less than $2 billion, it's a cheaper option than Trump Media stock (worth nearly $5 billion). And the company also has a much more established business today, centering around its cable channel and website.

Last year, Newsmax reported more than $171 million in revenue, with its top line growing by 26% year over year. The company incurred a loss of more than $72 million but with strong gross profit margins of around 50%, there may be hope for the business to one day turn a profit as it scales its operations and adds to its subscribers.

With the company focused on conservative news, it could stand to benefit from President Trump's strong popularity. Newsmax rose in prominence during Trump's first presidential term as he soured on once-favored Fox News, which he called "unwatchable" back in 2020.

Which stock is the better buy?

Although both media stocks present risks and neither is a safe buy, if you're deciding between the two, I'd go with Newsmax.

At this stage, Trump Media doesn't seem to be much more than a meme stock. It isn't generating much revenue, and simply having a strong cash balance doesn't make it an investable business. It's a speculative buy, and year to date, it has fallen more than 36%. What's concerning is that even amid that decline, it still looks egregiously overpriced and has plenty of room to fall even lower.

Almost by default, Newsmax looks to be the better option right now. Its valuation is lower, and its business is growing quickly. But with steep losses, it's not a safe stock to own either. However, with an established business and more modest valuation, I expect it'll outperform Trump Media this year and beyond.

Should you invest $1,000 in Newsmax right now?

Before you buy stock in Newsmax, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Newsmax wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $566,035!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $629,519!*

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Newsmax (NYSE: NMAX) stock got hit with another round of big sell-offs Friday. The media company's share price closed out today's trading down 10% despite the S&P 500 gaining 1.8% and the Nasdaq Composite climbing 2% in the daily session.

Newsmax stock saw another big valuation pullback today despite a seemingly positive development for the business. The company benefited from meme stock momentum in the first days following its initial public offering (IPO) on March 31.

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Newsmax stock sinks despite major contract renewal

Outside of an announcement that Newsmax had signed a multiyear program hosting extension with Greta Van Susteren, there wasn't anything in the way of business-specific news for the company today. If anything, the new contract to extend The Record With Greta Van Susteren is probably a positive development for the company -- but that wasn't enough to support the company's share price.

Initially, Newsmax stock actually posted gains in today's trading and had been up as much as 13.4% in the session, but it couldn't hold on to those gains, even though the broader market moved higher as the day progressed. Investors likely saw signs that the stock's meme momentum was fading and opted to sell shares in response.

What's next for Newsmax?

Despite huge sell-offs this week, Newsmax still has a market capitalization of roughly $2.94 billion. With the business posting sales of $171 million last year, the company is now valued at roughly 17.2 times the revenue it recorded last year.

While Newsmax managed to increase sales roughly 26% annually last year, there's a risk that sales growth will be significantly lower this year in the absence of tailwinds connected to the 2024 elections. Given that the business also posted a $72 million net loss last year, it's hard to get excited about the stock, even after recent valuation pullbacks.

Should you invest $1,000 in Newsmax right now?

Before you buy stock in Newsmax, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Newsmax wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Shares of Newsmax (NYSE: NMAX) are falling this week. As of 1 p.m. ET, the company's stock had lost 46%. The fall comes as the S&P 500 and the Nasdaq Composite saw one of their most chaotic weeks in years.

This week, the media company was dealt a major blow in its ongoing defamation case with Dominion Voting Systems.

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The Defamation Case Will Continue

On Wednesday, Judge Eric M. Davis of the Delaware Superior Court ruled that the cable news channel had made defamatory statements about Dominion Voting Systems when it falsely claimed the company rigged votes in the 2020 presidential election. The judge said there was "clear and convincing evidence" that Newsmax's statements were false and that they caused damage to the company.

The case will now be heard in front of a jury, which will decide whether Newsmax knew its claims were false and, if so, determine a financial penalty. A similar suit with Fox News was settled with Dominion for nearly $800 million.

It's much more than the case

While the case is bad news for the company both reputationally and financially, Newsmax stock was already sliding before the verdict. That's because even after sliding nearly 50% this week, it is wildly overvalued.

The company lost $72 million on $171 million in sales last year, yet its stock currently trades at around 19 times sales. Compare that to Fox News' parent company, Fox -- a company with much more to its business than just news -- which trades at just 1.5 times sales. Newsmax stock has much further to fall, in my opinion.

Should you invest $1,000 in Newsmax right now?

Before you buy stock in Newsmax, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Newsmax wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,779!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $659,306!*

Now, it’s worth noting Stock Advisor’s total average return is 787% — a market-crushing outperformance compared to 152% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 10, 2025

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.