Newsmax (NMAX 3.75%) stock got hit with a double-digit sell-off last month despite a bullish backdrop for the broader market trading. The company's share price fell 12.2% across July's trading. Meanwhile, the S&P 500 index rose 2.2%, and the Nasdaq Composite climbed 3.7% over the period.
The broader market saw some big swings in conjunction with macroeconomic and geopolitical news last month, but major indexes managed to close out the stretch solidly in the green. Despite the absence of any major bearish catalysts for Newsmax, the stock saw another substantial round of sell-offs in July.
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Newsmax stock continued to face valuation pressures last month
Newsmax held its initial public offering (IPO) at the end of March and saw absolutely massive gains following its public debut. While it's not unusual for a stock to see significant gains in its first couple days of trading, the media specialist's valuation surge was far outside the bounds of normal post-IPO rallies. Across the company's first two days of trading, Newsmax rose roughly 2,200% from its initial offering price and hit a pricing high of $265 per share.
Crucially, Newsmax's incredible post-IPO gains don't appear to have been driven by any business fundamentals or future growth opportunities. Instead, the massive rally was the results of meme stock trading. Following its initial rally, the media specialist's share price has generally faced consistent downward pressures -- and sell-offs continued in July's trading. The stock is now down roughly 95% from the valuation high mark it reached shortly after its public debut.
There wasn't any major, company-specific news that drove the company's share price lower in July, but there weren't any substantial new bullish catalysts, either. Despite a surge of interest in a new batch of meme stocks last month, Newsmax wasn't included in the cohort. With no game-changing positive news to support valuation gains and the stock missing out the on the latest round of frenzied meme trading, Newsmax notched another month of double-digit sell-offs in July.
Newsmax has kept sinking in August
Newsmax stock has continued to lose ground in August's trading. As of this writing, the company's share price has fallen 13.9% in the month. Even though the stock has actually seen sell-offs accelerate, there haven't been any major business-specific developments propelling the downward valuation adjustment. Newsmax garnered early support from meme-stock traders, but some shareholders who were hoping to score explosive short-term gains seem to have been gradually moving out of their positions.
Following big valuation contractions, Newsmax now has a market capitalization of roughly $1.5 billion and is valued at approximately 8.2 times this year's expected sales. While the stock now trades at its lowest level since its public debut, the company's lack of profitability and other factors mean that it's still a risky play.
