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A 735% surge from its IPO price on its trading debut, followed by another 180% surge the following day, summarises conservative media outlet Newsmax Inc.'s trading history on Wall Street so far.
A 2,230% surge from its IPO price in just two trading days has given the media outlet greater market capitalisation than its other, legacy, illustrious peers.
By the close of trading on Tuesday, Newsmax had a market capitalisation of $30 billion, surpassing Fox, Warner Bros Discovery, News Corp, Paramount, New York Times, and Trump Media, which also had its fair share of wild swings recently.
As many as 10 million shares of Newscorp changed hands on Tuesday, adding another $19.2 billion to its market capitalisation.
The spike in two days has made the company's largest shareholders laughing all the way to the bank, at least on paper. Christopher Ruddy, Newsmax's CEO, who owns nearly one-third of the company's shares, now values his stake at $9.1 billion, making him richer than some of the most prominent billionaires of the US, including Bill Ackman and Mark Cuban.
Interactive Brokers Group Inc. founder Thomas Peterffy owns the second-largest stake, now worth $5.4 billion.
The move is reminiscent of the meme-stock mania of 2020 and 2021 where stocks saw eye-popping gains, leaving fundamentals far behind. GameStop has been a case in point. From a high of well over $80, back in 2021, the stock now languishes around the $20 per share mark.
“This is like the initial market reaction to DJT on steroids,” said Steve Sosnick, chief strategist at Interactive Brokers, referencing the surge in shares of President Donald Trump’s media company, Trump Media and Technology Group Corp., which trades under his initials.
Just seven other stocks ended their debut sessions up more than 700% after a US IPO in the past five years, delivering returns to well-timed trades. Such firms have been losers in the long run, with shares of the average company in the group down nearly 94% from their IPO prices, crashing roughly 99% from their respective peaks.
Newsmax reported $171 million in revenue last year, meaning it trades at a trailing price-to-sales ratio of around 175, calculations by Bloomberg show.
The cable network is still facing litigation that could impact its bottom line, over broadcasts claiming voting technology companies rigged the 2020 presidential election against Trump. Newsmax settled a defamation lawsuit with Smartmatic Corp. according to an announcement in September.
A suit from Dominion Voting Systems Corporation Inc. is ongoing, however, its filing shows. Dominion is seeking as much as $1.6 billion in compensatory damages as well as punitive damages, and a trial is expected to begin as soon as April 28. Newsmax believes the case is without merit and will continue to defend against the suit, according to the filing.
(With Inputs From Agencies.)
