Is Newsmax Stock (NMAX) a Buy?

Key Points

• Warren Buffett has a two-step test for determining whether or not to buy a stock.

• Newsmax fails the first step in the legendary investor's test.

• These 10 stocks could mint the next wave of millionaires ›

Newsmax (NYSE: NMAX) covers both good news and bad news on its TV network. There's also good news and bad news about Newsmax itself for investors.

The good news is that shares of the broadcaster have jumped more than 50% year to date. The bad news is that Newsmax stock is down more than 90% from its peak following an explosive initial public offering (IPO) in March 2025.

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But, as with any story, the most important question is: What will happen next? Is Newsmax stock a buy right now?

The Warren Buffett way

I seriously doubt that Warren Buffett watches Newsmax very much, if at all. The legendary investor's political views don't seem to align well with the rightward tilt promoted by Newsmax. However, looking to Buffett could help determine whether or not buying Newsmax stock makes sense.

Buffett wrote to Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) shareholders in 2014 that he and his late business partner, Charlie Munger, had a two-step test to decide whether or not they should buy a stock (or an entire business). This test is easy to understand, but not always all that easy to perform.

First, Buffett determines if he can "sensibly estimate an earnings range for five years out, or more." A key prerequisite for estimating earnings is that the business must be within what Buffett referred to as his "circle of competence." In other words, he must understand the business well enough to project its earnings for several years into the future.

The "Oracle of Omaha" only proceeds to the second step of the test if he can achieve the first step successfully. If he can't (which Buffett acknowledged happened more often than not), he wouldn't buy the stock and would instead look at other candidates.

What is that second step? Buffett determines if the stock trades at a reasonable price relative to the lower end of his estimated earnings range. If it does, he buys. If not, he moves on.

How Newsmax stacks up

Unfortunately, projecting Newsmax's earnings growth is tricky. For one thing, the company posted a net loss of $75.2 million in the second quarter of 2025. Most of this loss stemmed from a $67 million settlement with Dominion Voting Systems related to a lawsuit alleging that Newsmax falsely accused Dominion of rigging the 2020 presidential election.

However, the problem goes beyond Q2. Newsmax hasn't generated positive quarterly earnings in any of the previous four quarters. The company acknowledged in its latest 10-K filing to the U.S. Securities and Exchange Commission, "We have incurred losses in prior periods, may not be profitable in the future and our plans to maintain and increase liquidity may not be successful."

Wall Street analysts project that Newsmax's bottom line will improve year over year in 2025. They also look for improvement next year. But analysts nonetheless expect the company to continue losing money.

Newsmax's revenue continues to grow by a healthy clip, jumping 18.4% year over year in Q2. However, I don't think the stock would get past the first part of Buffett's two-step test.

Image source: Getty Images.

Is Newsmax stock a buy?

Based on Buffett's criteria, Newsmax stock isn't a good pick. Even if we don't abide by Buffett's test, though, I think there are a couple of other yellow flags with the stock.

Newsmax's price-to-sales (P/S) ratio is 10.5. That's much higher than the average P/S multiple of 3.24 for the communications services sector. The company's growth doesn't appear to be strong enough to support this premium valuation, either. To make matters worse, the Wall Street revenue estimate for 2026 reflects a slowing growth rate, according to financial infrastructure and data provider LSEG (OTC: LNST.Y).

Perhaps Newsmax will be a great stock to buy sometime in the future. But for now, it's not.

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Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.