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InvestingPro’s Fair Value analysis has once again demonstrated its effectiveness in identifying mispriced stocks, this time with a successful bearish call on Newsmax Inc. (NYSE:NMAX). The platform’s proprietary valuation models flagged NMAX as significantly overvalued in April 2025, preceding a 43% decline in the stock price. For investors seeking similar opportunities, check out our regularly updated Most overvalued list.
Newsmax, a conservative media company operating in the Consumer Cyclicals sector, has been expanding its digital and traditional media presence. When InvestingPro’s Fair Value models identified the stock as overvalued on April 20, 2025, the company was generating annual revenue of $175.7 million but showing concerning fundamentals with negative EBITDA of -$24.4 million and earnings per share of -$1.19.
The Fair Value analysis proved remarkably accurate, with the stock declining from $25.50 to $14.41 in less than two months, representing a 43.49% drop. This movement closely aligned with InvestingPro’s estimated downside potential of 41.53%, demonstrating the model’s precision in identifying overvalued securities.
Despite recent positive developments, including Newsmax’s upcoming inclusion in the Russell 2000 Index and a new distribution deal with Hulu + Live TV, the company’s fundamental challenges appear to have justified the bearish outlook. The expansion of social media followers to 20 million and a Caribbean distribution agreement with Supercanal haven’t been sufficient to support the previous valuation levels.
InvestingPro’s Fair Value methodology combines multiple valuation approaches, including discounted cash flow analysis, peer comparisons, and market multiples, to determine a stock’s intrinsic value. This comprehensive approach helped identify Newsmax’s unsustainable valuation despite positive headline news.
Investors looking to access similar market-beating insights and avoid overvalued stocks can benefit from InvestingPro’s suite of analytical tools. The platform’s track record with calls like Newsmax demonstrates its value in identifying both opportunities and risks. Learn more about InvestingPro to access Fair Value analyses, real-time alerts, and comprehensive financial data that can help protect and grow your portfolio.