Shares of Newsmax (NMAX -10.28%) are plunging on Thursday. The media company's stock lost 9% as of 3:50 p.m. ET. The steep decline comes as the S&P 500 (^GSPC -0.53%) and Nasdaq Composite (^IXIC -0.83%) lost 0.3% and 0.8%, respectively.

There isn't a direct catalyst today, so here's a quick analysis of the company's stock.

Newsmax saw its stock skyrocket nearly 1,800% in the first two days following its recent initial public offering (IPO), before falling roughly 90% over the next week. The conservative media company's viewership has been spiking, leading to the intense excitement around its stock. Newsmax's Q1 viewership jumped 50% year over year, and it is now one of the five most-watched channels in all of cable and the fourth-most-watched cable news channel. Along with its viewership, its revenue has grown considerably as well. The company's revenue jumped 26.4% from 2023 to 2024.

Image source: Getty Images.

There are plenty of reasons to be wary

That's about where the good news ends. The company is operating deep in the red, losing more than $17 million in the first quarter of 2025. Its viewership numbers are also less impressive when you consider that most cable news channels saw comparable major growth over the same period and that its biggest competitor, Fox News, is still miles ahead. All 15 of the most-watched shows on cable appear on Fox. And that 15th-ranked show has 3 times as many viewers as Newsmax's top-ranked program.

Despite this disparity, Newsmax stock carries a price-to-sales ratio more than 8 times that of Fox News' parent company. This seems divorced from reality to me. And if that weren't reason enough to stay away from this stock, Newsmax is facing massive litigation over its false statements regarding the 2020 election. The penalty it could face would potentially bankrupt the company.