Newsmax (NMAX -14.82%) stock has been on a roller-coaster ride since its initial public offering (IPO) on April 1. After starting with an IPO price of just $10 per share, it quickly rocketed above $250 -- after opening on April 1 at $126 -- before falling back to $29 at the time of this writing. The excitement surrounding the stock reflects a broader social trend toward conservative media. But is Newsmax a good way to bet on it? Let's dig deeper to see what the next three years could have in store.

Conservative media is rising in popularity

While it is too early to draw long-term conclusions, Donald Trump's popularity has corresponded with changing consumer preferences in media. Conservative media giant Fox News saw average primetime viewership surge 46% year over year to 3.01 million in the first quarter, while left-leaning rivals MSNBC and CNN saw average viewership drop 18% and 6%, respectively (to 1.02 million and 558,000), according to a Deadline article.

While Newsmax hasn't published its first-quarter viewership numbers, management has said that primteime viewership rose 20% in the period and it is "the fourth highest-rated cable news channel, according to Nielsen."

The bull thesis for Newsmax assumes that the company can continue to experience above-average growth and possibly take market share from larger rivals through its unapologetically right-wing programming.

In February, Newsmax reported it was voted the "most trusted" cable news outlet by attendees at the Conservative Political Action Conference (CPAC). The company monetizes its cultural cachet through a combination of advertising, subscription fees, and even "neutraceutical" wellness products. However, while the stars seem aligned for Newsmax, it also faces substantial long-term challenges to its business model.

Cable news is a dying industry

While Newsmax is benefiting from the increasing popularity of conservative media, it must also contend with the rapid decline of pay TV (cable and satellite) in general. Pay TV subscriptions declined 4.9% year over year in 2025, according to one estimate, and investors should expect this trend to continue over the long term as older viewers fail to be replaced with younger ones.

Essentially, Newsmax is fighting for a bigger slice of a shrinking pie. And its most significant challenge may be new content mediums like streaming, podcasts, and YouTube instead of traditional broadcast media.

These trendier media platforms also tend to attract the particularly valuable 18-34 age demographic, while the average Newsmax viewer is above the age of 45. Older viewers are less valuable for advertisers because they tend to be more set in their ways regarding brand loyalties.

Image source: Getty Images.

That said, Newsmax isn't taking this challenge lying down. Like its rivals, the company has built a channel on social media site YouTube, where it boasts 2.34 million subscribers. (CNN's YouTube channel has 18 million subscribers.) Newsmax also offers an online streaming service for $4.99 per month. However, it remains unclear if these efforts will be enough to generate sustainable shareholder value.

Newsmax's operational results are not impressive

As a public company, Newsmax's first job will be to make money for its shareholders. So far, the stock has not done that for any shareholder that bought on Day 1 and held.

The reported numbers have been mixed. While revenue jumped 26% year over year to $171 million in 2024, this translated into an operating loss of $72.2 million after taking into account the direct costs of revenue and general and administrative expenses (G&A).

G&A outflows include office salaries, travel expenses, and legal fees. The company last year settled a $40 million defamation lawsuit with Smartmatic over false claims about the company's voting machines following the 2020 presidential election. But its legal exposure is far from over. Voting machine company Dominion Voting Systems is also pursuing a similar lawsuit against Newsmax after reaching an eye-watering $787.5 million settlement with Fox News over similar claims.

What will the next three years have in store?

Over the next three years, Newsmax will likely continue losing money because of its legal exposure and high operational expenses. While the positive trends in conservative media could eventually help the company find its footing, the stock's valuation looks too high for comfort right now.

With a price-to-sales (P/S) ratio of 19.6, Newsmax trades at a tremendous premium over the S&P 500 average of 2.8. Investors should wait for a better price before considering a position in the stock.