1 Reason Why I Can't Bring Myself to Touch Newsmax Stock With a 10‑Foot Pole

Core Viewpoint - Newsmax's valuation is significantly skewed, making it a poor investment choice despite its initial popularity as a meme stock [1][2]. Company Overview - Newsmax went public on March 31, 2025, through a Regulation A+ IPO, allowing both accredited and non-accredited investors to participate [4]. - The stock initially surged over eightfold on its first trading day, closing at $83.51, and reached a peak of $265 before plummeting to around $9 per share [5]. Valuation Concerns - The company currently has a market capitalization of $1.18 billion and an enterprise value of approximately $1.05 billion [7]. - Projected revenue for the next year is $206 million, leading to a forward EV/sales ratio of about 5.1, which is significantly higher than competitors like Fox Corp. (2) and Sinclair (1.45) [7]. Growth and Profitability Outlook - Newsmax is expected to grow moderately at 13.8% next year, with forecasts indicating near-breakeven profitability by 2027 and an EPS of $0.12 in 2028 [8]. - The potential for further multiple compression exists if profitability is not achieved quickly [8]. Strategic Considerations - There is speculation that Newsmax could leverage its high stock price for stock-based acquisitions of smaller, profitable competitors, but this remains uncertain [9].