Newsmax Inc. (NMAX) stock is experiencing a sharp correction in pre-market trading on Wednesday, plummeting 33.05% following an extraordinary rally in its first two days of trading. The conservative media outlet, which recently went public, saw its shares soar by an astonishing 2,230% since its debut, pushing its market valuation to surpass that of its rival, Fox Corp.

The initial surge was reminiscent of the meme stock craze seen in 2020 and 2021, with investors piling into the stock and driving its value to dizzying heights. Newsmax's IPO was priced at $10 per share, but the stock closed its second day of trading at $233, after reaching as high as $265. This meteoric rise gave the company a market capitalization of approximately $30 billion, despite reporting only $171 million in revenue last year.

However, the tide appears to be turning as investors reassess the company's fundamentals. The current pullback suggests that market participants are beginning to question the sustainability of Newsmax's inflated valuation. Analysts have pointed out that the company's price-to-sales ratio had reached an astronomical level of around 175, far exceeding the metrics of other well-known meme stocks. Additionally, Newsmax faces ongoing litigation related to its 2020 election coverage, which could potentially impact its bottom line. As the initial excitement wanes, it seems that reality is setting in, prompting a significant correction in the stock's price.