The stock of Newsmax experienced a remarkable surge of up to 2,190% after its initial public offering, reaching $229 per share on Tuesday. This surge resulted in the right-wing cable channel achieving a market value exceeding $20 billion. The increase in the stock's value is potentially attributed to the limited number of shares offered during the 'mini IPO.'
Since debuting in the IPO on Monday, Newsmax has gained attention as a meme stock. The substantial rise in the company's shares in just two days since going public has led to a market valuation surpassing $20 billion. This surge has propelled its founder and CEO, Chris Ruddy, into the billionaire ranks on paper. Investors seem to perceive Newsmax as a valuable entity, ranking it above well-established brands like The New York Times and approaching the value of Fox Corporation, which owns the popular conservative TV network Fox News.
The significant increase in Newsmax's stock value could be traced back to the limited number of shares available in the "mini IPO." Stocks with a restricted "float" can experience significant and swift price movements due to high demand and low supply.
During the mini IPO, Newsmax sold 7.5 million shares at $10 each, raising $75 million. In comparison, nearly 9 million shares were traded on Tuesday by 3:02 p.m. This scarcity of available shares in the market relative to the market cap can lead to drastic price fluctuations, as highlighted by Paul Hickey, co-founder of Bespoke Investment Group.
Retail investors have been actively participating in trading Newsmax shares, with the company becoming a top trending stock on platforms like Stocktwits. The surge in popularity of conservative news outlets, including Newsmax, has been observed since Trump's election win in November. This boosted viewership on right-leaning channels, with Newsmax, despite being behind Fox in popularity, steadily gaining traction post the 2024 election.
In 2024, Newsmax reported revenue of $171 million but faced a loss of $72 million. In February, the company raised $225 million through a private offering of preferred shares and is listed on the New York Stock Exchange with the ticker symbol "NMAX."