Conservative cable channel Newsmax shares plunge 77% after 2-day surge
Shares of Newsmax, a conservative news channel, plummeted over 70% on Wednesday after its initial surge as a new public company turned out to be short-lived. The stock experienced a drastic 77.5% drop, following a remarkable 2,230% increase in Newsmax’s first two days of trading on the New York Stock Exchange. This surge had briefly propelled the company’s market capitalization to nearly $30 billion, surpassing the market cap of established media giants like Warner Bros. Discovery and Fox Corp.
Newsmax made its debut on the New York Stock Exchange through a Regulation A offering, which differs from a traditional initial public offering by allowing small companies to raise capital without going through the full SEC registration process. This offering primarily targets retail investors, and in the case of Newsmax, approximately 30,000 retail investors participated in the offering.
The public offering garnered significant attention from retail traders, with some comparing Newsmax’s stock to the “New GME” in online chatrooms. The reference to GME, which refers to the meme stock GameStop, alludes to the speculative trading frenzy that captivated Wall Street in 2021.
Newsmax has a limited “float,” with less than 6% of its shares available for public trading. Out of a total of 128 million fully diluted shares, only 7.5 million shares are accessible for trading. Despite its small float, Newsmax has seen a rise in ratings following the election of President Donald Trump and other prominent Republicans. While it still trails behind industry leader Fox News, Nielsen reports that Newsmax ranks in the top 20 among cable networks for average viewership in both prime time and daytime slots.
In conclusion, Newsmax’s rollercoaster ride on the stock market serves as a reminder of the volatility and unpredictability of the financial markets. The company’s rapid rise and subsequent decline underscore the importance of thorough due diligence and risk assessment for investors, especially in the ever-changing landscape of media and entertainment.
