InvestingPro’s Newsmax overvaluation call yields 51% return in 4 months

Published 23/09/2025, 12:04
InvestingPro’s Newsmax overvaluation call yields 51% return in 4 months

When InvestingPro’s Fair Value models flagged Newsmax Inc. (NYSE:NMAX) as significantly overvalued in May 2025, the conservative media company’s stock was trading at $25.82. Four months later, this bearish signal has proven remarkably accurate, with shares declining to $12.60 – delivering a 51.2% return for investors who heeded the warning. For investors seeking similar opportunities, InvestingPro’s Most overvalued list continues to identify potentially overvalued stocks across markets.

Newsmax , a multimedia broadcasting company operating in the Consumer Cyclicals sector, has faced significant challenges since the overvaluation alert. When InvestingPro’s models identified the mispricing, the company reported quarterly revenue of $175.7 million with negative EBITDA of $24.4 million. The subsequent deterioration in fundamentals validated the bearish thesis, with latest figures showing EBITDA losses widening to $96.2 million despite marginal revenue growth to $182.9 million.

The stock’s descent accelerated following a $67 million settlement with Dominion Voting Systems, significantly impacting the company’s financial health. While Newsmax reported 18% revenue growth in Q2 2025 and secured inclusion in the Russell 2000 Index, these positive developments failed to offset mounting operational challenges and declining profitability, as evidenced by EPS deteriorating from -$1.19 to -$1.86.

InvestingPro’s Fair Value analysis proved particularly precise, with the model’s target price of $12.61 almost exactly matching the current trading level of $12.60. This accuracy stems from a comprehensive valuation methodology that incorporates multiple factors including cash flow analysis, comparable company metrics, and forward-looking growth projections, while accounting for company-specific risks and market conditions.

Recent developments continue to support the original thesis. Despite expanding its distribution through partnerships with Fubo and launching on new streaming platforms, Newsmax’s fundamental challenges persist. The company’s financial health score of 0.94 from InvestingPro suggested elevated risks even before the recent decline.

InvestingPro’s success in identifying this opportunity demonstrates the power of combining fundamental analysis with advanced valuation metrics. For investors seeking to protect their portfolios from similar overvaluation risks or identify new opportunities, InvestingPro offers comprehensive tools for stock analysis, including Fair Value models, financial health scores, and real-time alerts. Don’t wait for the next major market movement – leverage professional-grade analysis tools to make more informed investment decisions today.

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