Why Newsmax Stock Is Plummeting This Week

Johnny Rice, The Motley Fool

Fri, Apr 11, 2025, 10:25 AM 2 min read

Shares of Newsmax (NYSE: NMAX) are falling this week. As of 1 p.m. ET, the company's banal had mislaid 46%. The autumn comes arsenic the S&P 500 and the Nasdaq Composite saw 1 of their astir chaotic weeks successful years.

This week, the media institution was dealt a large stroke successful its ongoing defamation lawsuit with Dominion Voting Systems.

On Wednesday, Judge Eric M. Davis of the Delaware Superior Court ruled that the cablegram quality transmission had made defamatory statements astir Dominion Voting Systems erstwhile it falsely claimed the institution rigged votes successful the 2020 statesmanlike election. The justice said determination was "clear and convincing evidence" that Newsmax's statements were mendacious and that they caused harm to the company.

The lawsuit volition present beryllium heard successful beforehand of a jury, which volition determine whether Newsmax knew its claims were mendacious and, if so, find a fiscal penalty. A akin suit with Fox News was settled with Dominion for astir $800 million.

While the lawsuit is atrocious quality for the institution some reputationally and financially, Newsmax banal was already sliding earlier the verdict. That's due to the fact that adjacent aft sliding astir 50% this week, it is wildly overvalued.

The institution mislaid $72 cardinal connected $171 cardinal successful income past year, yet its banal presently trades astatine astir 19 times sales. Compare that to Fox News' genitor company, Fox -- a institution with overmuch more to its concern than conscionable quality -- which trades astatine conscionable 1.5 times sales. Newsmax banal has overmuch further to fall, successful my opinion.