Shares of conservative media outlet Newsmax (NYSE: NMAX) traded with extreme volatility today. Shares fell as much as 24% this morning before doing a complete 180. As of 1:50 p.m. ET, the stock traded about 23% higher.
Are Trump's tariffs impacting the stock?
Newsmax raised $75 million in a more limited IPO on Monday. The company went public under a Securities and Exchange Commission exemption that allows it to raise up to $75 million over a 12-month period without going through the full registration process required for most companies pursuing a non-exempt IPO. Interestingly, Newsmax's IPO was sold to 30,000 retail investors, who effectively turned the company into a meme stock. Newsmax's coverage has been very loyal to President Donald Trump.
Newsmax's stock took flight immediately following its IPO, soaring as much as 2,230% by Tuesday. The limited number of shares sold, roughly 7.5 million, contributed to the surge. At that point, it also likely became a difficult stock to short, according to some experts, due to how expensive it would be to borrow the necessary shares. Yesterday, however, shares of Newsmax plummeted 77%.
Many believe that Trump has been the main reason behind the stock's success. But the president's reciprocal tariffs could hurt the company's core business. Most economists expect the tariffs to slow growth in the U.S. economy, which often leads to a slowdown in ad spend. In 2024, advertising made up close to 64% of Newsmax's total $171 million of revenue.
It's a meme stock, so be careful
Newsmax has undoubtedly morphed into a full-blown meme stock. As of this writing, Newsmax had a roughly $4.75 billion market cap, but lost over $72 million in 2024. I'd stay away from the stock, because shares will continue to trade in an extremely unpredictable manner.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
