In a remarkable turnaround, Newsmax Media Inc. (NYSE: NMAX) saw its stock price surge by an impressive 11.6% by the close of trading last Thursday, despite being a shortened week in the stock market. This rebound came after a particularly tumultuous previous week characterized by substantial sell-offs, illustrating the volatility that has recently marked the trading landscape.

While there was no specific business-related announcement to drive this uptick, the increase in Newsmaxs stock can largely be attributed to a broader trend of rebound trading and a resurgence in interest surrounding meme stocks. This phenomenon, characterized by stocks that gain popularity through social media and online forums, has contributed to sharp price movements, both positive and negative.

In contrast to Newsmax's remarkable gains, the S&P 500 index recorded a downturn of 1.5% compared to the prior week, underscoring the unique resilience of Newsmax amidst a generally bearish market. This resilience is particularly noteworthy in light of the companys previous week, where its stock had tumbled approximately 49%. This decline was prompted by volatility linked to meme stock trading and a significant legal ruling: a U.S. district court determined that Newsmax had made defamatory statements regarding Dominion Voting Systems. This ongoing legal dispute is set to escalate to a jury trial, raising further questions about the company's future.

Looking ahead, Newsmax seems poised for potential growth. Last year, the company reported a substantial 26% increase in revenue, bringing its total to $171 million. Recent data released in a press release from the company indicated a robust increase in viewership, as reported by Nielsen. In the first quarter, total day viewership skyrocketed by an astounding 690%, while prime-time slots enjoyed an even more impressive 1,027% increase. This surge in audience engagement suggests that Newsmax may be gaining traction among viewers, which could bode well for future advertising revenues.

However, whether this increase in viewership translates into significant advertising dollars remains to be seen. For context, the media company reported a loss of $72 million in the previous fiscal year, and its current valuation stands at about 17 times its anticipated sales for 2024 following the recent gains. This raises a critical question for investors considering whether to buy into Newsmax.

Potential investors should exercise caution. Notably, the Motley Fool Stock Advisor analyst team has recently released a list of what they believe are the ten best stocks for investment at this time, and Newsmax did not make the cut. Investors might recall that companies such as Netflix and Nvidia were included in similar lists in the past, which yielded astonishing returns for early investors. For instance, if one had invested $1,000 in Netflix back in December 2004, that investment would have grown to an astounding $524,747 by now! Meanwhile, an investment in Nvidia in April 2005 would have turned into $622,041.

The Motley Fool reports an average return of 792%, significantly outperforming the S&P 500's 153%. Thus, while Newsmax shows signs of recovery, prospective investors are encouraged to weigh their options carefully before making any decisions.