Shares of the conservative media outlet Newsmax (NMAX -26.32%) had sunk by nearly 50% as of 1:25 p.m. ET today. There was no obvious reason behind the move but the stock has traded like a meme stock since going public on Monday, so big moves are to be expected.
Meme stocks are volatile
Newsmax, which has the fourth-largest cable news audience in the U.S., made its debut on the New York Stock Exchange on Monday in a small initial public offering that raised $75 million and priced shares at $10. The stock then took off, rising as high as $233 per share yesterday before crashing today. Still, the stock is up over 1,000% since it began trading.
Newsmax has long supported President Donald Trump, and it has not been uncommon to see Trump-linked media companies such as Trump Media & Technology Group trade like meme stocks.
NYSE: NMAX
Key Data Points
"This makes the early run-up in DJT seem like child's play. But both share the characteristic of offering a play on MAGA, and we've seen that sort of enthusiasm take on a life of its own," Interactive Brokers Chief Strategist Steve Sosnick recently told Barron's. Sosnick also noted that the small amount of shares sold (7.5 million) has put fuel on the fire, and that borrowing shares to short is likely too expensive right now.
Trade at your own risk
As I pointed out yesterday, Newsmax makes no sense to buy from a fundamental standpoint, given that the company reported a loss of over $72 million in 2024 and now trades at over an $10 billion market cap. Being a meme stock, it could certainly surge again in the near term, but buying it amounts to a highly speculative and risky gamble.
