Newsmax Gets Bad News: Is the Stock Poised to Plunge Even More?

Keith Speights, The Motley Fool

Tue, Apr 15, 2025, 1:47 AM 4 min read

Like any news-focused media company, Newsmax (NYSE: NMAX) centers its business on bad news. While many people say they prefer good news, bad news attracts viewers. Those viewers attract advertisers. And advertisers are Newsmax's primary revenue source.

However, Newsmax might not report much about the latest not-so-good news that affects its own business. Its share price has already fallen over 70% since the initial public offering (IPO) in March. Is Newsmax stock poised to plunge even more?

Delaware Superior Court Judge Eric M. Davis ruled against Newsmax last week in a lawsuit brought Dominion Voting Systems brought against the company. Dominion alleged that Newsmax "published false and defamatory statements" about the voting technology company's role in the 2020 U.S. presidential election.

Both Newsmax and Dominion filed motions to the court requesting a summary judgment, where the judge decides the case without going before a jury. The Delaware judge denied Newsmax's motion while partially granting and partially denying Dominion's motion.

Judge Davis determined that Dominion's evidence presented in its case was "clear and convincing." In his written ruling, he granted Dominion's request for summary judgment by determining that Newsmax's on-air statements about Dominion's role in the 2020 presidential election were defamatory and false. However, he denied summary judgment for both parties on claims of malice by the other, leaving that issue for a jury to decide.

All of this might sound familiar. Judge Davis also presided over a lawsuit filed by Dominion against Fox News. The parties ended up settling before the case went before a jury, with Fox News agreeing to pay $787.5 million to Dominion.

Dominion is seeking $1.6 billion from Newsmax. The financial impact of a trial loss on Newsmax would be significant.

In 2024, Newsmax generated revenue of $171 million, with $130.7 million of the total stemming from its broadcast operations. The company posted a net loss last year of roughly $72.2 million. If Newsmax has to pay $1.6 billion for reporting false and defamatory statements about Dominion, it could take years for the company to recover financially.

With such a significant risk, would it make sense for Newsmax to settle with Dominion? Possibly. The company did take this approach with a similar lawsuit filed by Smartmatic, another voting system company. Newsmax agreed to pay $40 million to Smartmatic to settle the case.