Stock surge today: Newsmax sees nearly 14% increase in value
Newsmax, the media company known for its conservative news, experienced a significant boost in its stock price recently, outperforming the S&P 500 index on Monday. The company's shares surged nearly 14%, while the S&P 500 index only gained 0.5% on the same day.
This dramatic increase can be attributed to the "index effect," a phenomenon where stocks can see a price boost due to the free publicity and increased visibility that comes with joining a well-known index. Newsmax was recently included in the Russell 2000 and Russell 3000 indexes as of June 30, 2025.
This inclusion serves as institutional validation of Newsmax's growth and expanding market presence. It could potentially lead to a $10.6 trillion passive asset inflow as index-tracking ETFs and mutual funds rebalance their portfolios. However, it's important to note that the inclusion in the indexes does not, by itself, justify or sway investors towards or away from the company's stock.
Newsmax's current financial status reflects a transitional phase. The company reported solid revenue growth in Q1 2025, with $45.3 million, marking an 11.6% increase year-over-year. This growth was driven by growth in advertising and affiliate revenues. However, the company still posted a net loss of $17.2 million, albeit an improvement from the previous year. The adjusted EBITDA margin deteriorated due to elevated costs from revenue-related expenses and administrative overhead, including costs related to becoming a publicly traded company.
The inclusion in the Russell indexes promises enhanced liquidity and investor interest in the near term. However, the outlook remains cautiously optimistic given the ongoing challenges in shifting from traditional cable to digital streaming. Newsmax's success ultimately depends on its fundamentals, not its inclusion in stock indexes.
In conclusion, Newsmax's recent stock price surge is a result of the "index effect," providing a powerful boost to institutional credibility and share demand. The company is now part of the Russell 2000 index, which tracks small-cap equities, and the Russell 3000 index, which includes the largest U.S. companies. While the inclusion offers potential benefits, Newsmax continues to grapple with profitability pressures as it navigates the transition to digital media.
Investors might find the surge in Newsmax's stock price appealing given its recent inclusion in the Russell 2000 and Russell 3000 indexes, which could trigger an increase in demand for its shares. The influx of passive asset inflow from index-tracking ETFs and mutual funds as they rebalance their portfolios could further boost Newsmax's financials. However, the company's ongoing transition from traditional cable to digital streaming presents challenges that could potentially impact its profitability.
