Newsmax, a conservative cable channel backed by US president Donald Trump, has seen an explosive stock market debut, with shares soaring about 2,230% since its listing on the New York Stock Exchange (NYSE) on Monday.
The TV company’s shares were initially priced at $10 (€9.30) each, but closed at $233 on the NYSE on Tuesday, having risen as high as $264.89 (€245.20) on Tuesday. However, shares pulled back a little in pre-market trading on Wednesday, dropping 23.7% to $177.8 (€164.60).
Newsmax was founded back in 1998 as an online platform, launching its cable news channel in 2014. It currently has a market capitalisation of about $29.9 billion (€27.7bn), according to Investing.com, which is more than other major media companies such as Paramount Global and Warner Bros Discovery. It is also more than Fox Corp, which is the owner of competitor Fox News.
The news channel reaches more than 40 million US consumers, with breaking news from across the world, as well as other platforms. Viewers can access the channel through traditional satellite and cable providers, as well as the Newsmax website, social media platforms and app.
Other companies with a mostly conservative audience, such as Canadian video platform Rumble Inc and Trump’s media company Trump Media and Technology Group have also gone public recently.
Newsmax has seen increased popularity following US president Donald Trump starting his second term. The election of other right-wing politicians has also contributed to the success of the news channel.
Although it has yet to catch up with Fox News’ audience size, Newsmax has steadily grown its consumer base as the audience for right-wing, prime-time content has risen in recent months.
The success of its initial public offering (IPO) has taken the market by surprise, at a time when traditional cable TV is lagging, as more viewers opt for online streaming services instead.
Newsmax CEO Christopher Ruddy told CNN: “Last election Americans voted against the media establishment and similarly investors voted by enormously buying Newsmax stock to say they like us, they value us and they want us to grow.”
The company was driven to raise capital and go public following defamation lawsuits by Smartmatic and Dominion Voting Systems. These lawsuits alleged that Newsmax and other right-wing news outlets had spread false claims about Dominion Voting Systems and Smartmatic helping to rig the 2020 US presidential election by participating in voter fraud.
Newsmax ran an aggressive campaign via infomercials on the channel, encouraging viewers to invest in the company.
Newsmax’s rapid surge, mainly driven by retail investors, has been compared to the meme stock GameStop’s considerable rally during the pandemic. This has led to some investors warning that the surge might slow down soon, after the initial interest wears off.
The company’s falling share price in pre-market trading on Wednesday could potentially back up these expectations.
Newsmax is at a disadvantage compared to older, more established rivals such as Fox News, which are heavily diversified, operating in sports, video streaming and more, apart from news.
Furthermore, Newsmax had to shell out a $40m (€37.1m) settlement to Smartmatic regarding the above election rigging allegations, which could impact the company’s profits in the short-term as well.
