If you’re generous, then you’ll feel pity for the person, or people, who recently paid $265 for one of the newly public shares of right-wing broadcast company Newsmax. Transactions at the April Fools’ Day price ever-so-briefly gave the company a laughable market value of about $20 billion. In other words, buyers figured Newsmax was worth as much as a global media power such as Fox and Warner Bros. Discovery.
The moment of giddy exuberance quickly passed. Newsmax closed 10 days later at $22.85 a share. That’s still rich for a company that went public with a listing price of $10 a share. As the swings suggest, Wall Street is struggling to figure out if Newsmax is a smart bet or merely a MAGA meme stock.
Company Bulls Are Still Charging
Both sides of that debate have found fresh reasons to support their views over the last few weeks.
While Wall Street churned over President Trump’s so-called “Liberation Day“ tariffs, Newmax shares rose 5.2 percent after it announced a $1.2 billion standby equity purchase agreement with hedge fund Yorkville Advisors.
Keep an eye on this alliance. In January the firm, led by Mark Angelo, signed on as the Registered Investment Advisor for Trump Media and Technology Group’s new Truth.Fi financial services initiative which vowed to put up as much as $250 million into “American First investment vehicles.”
TMTG CEO Devin Nunes described Truth.Fi as “another step toward our goal of creating a robust ecosystem through which American patriots can protect themselves from the ever-present threat of cancellation, censorship, debanking, and privacy violations committed by Big Tech and woke corporations.”
Hold On a Minute
But a Delaware judge recently added a plot twist to Newsmax’s financial story. Superior Court Judge Eric Davis ruled that Dominion Voting Systems had presented “clear and convincing evidence” in a $1.6 billion suit that Newsmax had defamed the company by airing baseless claims that its voting machines had skewed results in the 2020 presidential election to favor Joe Biden.
A jury trial, set to begin on April 28, will now consider whether Newsmax aired the falsehoods maliciously or recklessly. That, in turn, could determine how much the broadcaster might have to pay in damages.
Newsmax has not reserved funds for a possible loss or settlement and insists it will hang tough. Its broadcasts “offered balanced and fair coverage in the dispute over the 2020 elections,” the company says in its annual report, adding that it will “vigorously defend” itself against Dominion whose case “is without merit.”
The judge’s ruling contributed to a 10 percent drop in Newsmax’s stock price, leaving it with a market value of $2.0 billion. That’s less than half the perceived value of Truth Social parent Trump Media and Technology Group (at $4.2 billion) and behind right wing video platform Rumble ($2.6 billion) but ahead of e-retailer Public Square ($77.7 million) and radio power Salem Media ($14.4 million).
Aside from the Dominion case, investors who look dispassionately at the information in Newsmax’s just-released annual report will find plenty of reasons to doubt the current price will hold. Last year the company lost $72.2 million, a 72.8 percent increase from 2023, on revenues of $171.0 million, up 26.4 percent.
About 64 percent of Newsmax’s revenues come from broadcast and digital ad sales, primarily for viewers age 45+ on TV channels Newsmax, Newsmax2, and World of War. Early this year the flagship channel averaged 309,000 viewers in prime-time and 211,000 during the day, according to Nielsen data cited by CNBC.
Newsmax has struggled to remain on cable and satellite TV, a declining business but one where distributors also pay most programmers a fee to carry their channels. To stay in their good graces, in 2023 the right-wing outlet sacrificed digital ad revenues by scrapping its free online transmissions. Instead it launched a $50 a year streaming service, Newsmax+, which had about 280,000 subscribers at the end of 2024.
Some of the company’s red ink is due to the $20 million that Newsmax paid to resolve Smartmatic’s defamation suit. Much like Dominion, the voting machine company alleged that Newsmax hosts and guests falsely said that it had skewed results in the 2020 presidential election to favor Joe Biden. Newsmax’s payment plus “associated legal fees” came to $76.9 million last year.
Newsmax is still on the hook for another $20 million, which the broadcaster says it will pay Smartmatic this year from “existing cash on hand.”
More Trouble Ahead
That’s not the end of the company’s legal woes. Newsmax says that in 2023 it agreed to a $41.3 million settlement with “a commercial counterparty” that accused it of breaching a contract and violating federal and state tax laws. It’s paying that out “over time.”
A nice little chart in the annual report says that Newsmax will cough up nearly $54.6 million in settlement payments through 2029 — including $29.1 million in 2025.
Think Positive…and Raise Millions
Newsmax remains optimistic about its business after it raised $300 million from its initial public offering and sale of private preferred shares.
Newsmax attracted 33.6 million viewers in the first quarter of this year, up 50 percent vs. the same period last year and 15 percent from the last three months of 2024, the company said recently.
“These strong surges in audiences rarely happen in cable news,” Media and Market Research VP Jason Villar said in a release. “We are clearly bucking the trend of cable news and overall cable viewership as viewers clearly like the product Newsmax is offering.”
The Financial Times, for one, thinks a high valuation is justified, noting that the media company “has barely made a start on monetizing its subscribers.”
For now, at least, the stock and ratings news should leave CEO Christopher Ruddy with a smile.
He calls all the shots. He controls nearly 82 percent of the voting shares, mostly through his ownership of all of the Class A stock which carries 10 votes a share vs. the publicly traded Class B stock with one vote apiece.
Did Someone Say “Billionaire?”
Ruddy doesn’t have to hoard his pennies while waiting for the lock-up period to end. His compensation reached $913,539 in 2024, Newsmax says. On top of his $373,077 salary and $275,000 bonus, the Boca Raton-based firm gave him a $124,771 reimbursement for his New York City apartment for the year up to August. That’s when Newsmax bought an NYC apartment where Ruddy now stays when he visits the Big Apple.
The company also paid $27,298 for his car lease and insurance, $48,790 to compensate for “any taxes resulting from” his work in NYC, and $46,746 for life insurance.
He won’t see a big payoff for six months when a lock-up agreement that prevents him from selling expires. If the stock price stays where it is, then the 39.2 million publicly traded shares he owns will be worth nearly $897 million.
Ruddy can always dream that Newsmax’s stock price will return to its early high. If it did, then his holdings would be worth at least $10.4 billion. And it would spare a lot of embarrassment for the April Fools’ Day investors who’d like to take the “kick me” sign off their backs.
Right Wing Biz Watch is an ongoing series of articles examining the business and finances of right wing media. Its author, David Lieberman, covered the media business full time for 30 years at USA Today and other publications before joining The New School as an Associate Professor in its graduate Media Management program.
