Better Alternative Media Stock: Newsmax vs. Reddit

Newsmax (NYSE: NMAX) and Reddit (NYSE: RDDT) are both growing in popularity as alternative news platforms. Newsmax, which operates linear and streaming TV channels, promotes itself as an alternative to mainstream conservative outlets like Fox News. Reddit blends social media, news aggregation, and discussion forum features -- so trending news stories often drive more users to its platform.

Newsmax went public this past March at $10 a share. It skyrocketed to a record high of $233 the following day -- mainly due to its close association with President Donald Trump and a tight supply of its IPO shares -- but it now trades at $8. Reddit went public at $34 last March, soared to a record high of $270.71 this September, and pulled back to around $208 currently.

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Newsmax lost its luster as its growth slowed down, it racked up steep losses, and it grappled with legal and competitive challenges. Reddit gained more momentum as its growth accelerated, it gained millions of new users, and its margins expanded. So, will Reddit remain the better alternative media investment than Newsmax?

What challenges does Newsmax need to overcome?

Newsmax launched its TV channel, Newsmax TV, across satellite and cable networks in 2014. It expanded rapidly by providing its channel for free (without any carriage fees) to those pay TV partners, and it launched a free streaming feed for its videos that same year.

Newsmax now claims to reach more than 30 million Americans through its cable, satellite, and digital channels. It grew rapidly during the first Trump administration, when President Trump frequently endorsed it as a conservative alternative to Fox News. Its annual revenue jumped from $135 million in 2022 to $171 million in 2024, even though its growth flatlined in 2023 after DirecTV temporarily dropped the channel in response to its abrupt demand for higher carriage fees.

But Newsmax was also broadly criticized for spreading conspiracy theories regarding rigged voting machines during the 2020 elections, the underlying causes of the Jan. 6 attack on the U.S. Capitol, and the safety of COVID-19 vaccines. Its voting fraud claims sparked defamation lawsuits from the voting system makers Smartmatic and Dominion -- which won $40 million and $67 million settlements against the company, respectively, in 2024 and 2025.

Those soaring litigation expenses, its limited ability to charge higher carriage fees, and the high costs of expanding its infrastructure to support its Newsmax+ subscription platform all caused its net losses to widen from $20 million in 2022 to $97 million in the first nine months of 2025.

For 2025, analysts expect Newsmax's revenue to rise 6% to $181 million as its net loss widens to $102 million. For 2026, they expect its revenue to increase 14% to $206 million as it narrows its net loss to $8 million -- but that acceleration will hinge on the growth of its subscription platform Newsmax+, milder macro headwinds for its core advertising business, and favorable negotiations for higher carriage fees. But with an enterprise value of $885 million, it isn't a bargain at 4 times next year's sales.

What catalysts could drive Reddit higher?

Reddit ended the third quarter of 2025 with 116 million daily active unique (DAUq) visits. 50.2 million of those DAUq visitors were logged in, which makes them easier to lock into discussions and monetize with ads, as opposed to logged-out users who were passively browsing the site.

That's up from 101.7 million DAUq visitors and 46.1 million logged-in DAUq visitors at the end of 2024. That ongoing expansion is being driven by a self-sustaining cycle of major events (like elections, geopolitical conflicts, big movie releases, or meme stock trading) pulling more users to its platform. As those users engage in more online discussions, Reddit collects more data to craft more effective targeted ads. It's also becoming a key source of human-generated responses for Alphabet's Google and OpenAI, which both integrated Reddit's content into their generative AI platforms through data-sharing deals.

In 2024, Reddit's revenue surged 62% as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) turned positive. For 2025, analysts expect its revenue to rise 65% to $2.1 billion as its adjusted EBITDA more than doubles to $805 million.

That acceleration should be driven by more divisive news events, generative AI platforms funneling more users to its platform, and the expansion of its Reddit Premium tier -- which offers ad-free browsing and other VIP perks. It's also expanding more aggressively into higher-growth overseas markets and using AI to optimize its search and ad monetization tools.

For 2026, analysts expect its revenue and adjusted EBITDA to rise 38% and 55%, respectively. With an enterprise value of $37.1 billion, Reddit initially looks a bit pricey at 12 times next year's sales -- but it still seems reasonably valued at 29 times its adjusted EBITDA.

The better buy: Reddit

Newsmax will stay in the penalty box until it stabilizes its soaring expenses and narrows its losses. As for Reddit, it will remain the better buy and a solid long-term play on the gradual convergence of the online search, news aggregation, and online discussion markets.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends Reddit. The Motley Fool has a disclosure policy.