Sotheby’s shares drop after auction

Shares of art auctioneer Sotheby’s on Thursday had their biggest one-day drop after paintings by Vincent van Gogh and other famous artists failed to sell at an Impressionist art sale in New York -- prompting concern that Wall Street’s woes will batter the art world.

The auction Wednesday evening took in $269.7 million, including commissions. That was a third less than the low presale estimate of $401 million.

Sotheby’s had promised sellers fixed prices for works by Van Gogh, Pablo Picasso and other artists, regardless of whether the pictures sold, and some didn’t.

The shortfall may signal that well-heeled Wall Street art collectors, such as hedge fund managers, are unable or unwilling to step up and buy because of losses they’ve suffered amid recent financial market turmoil, analysts said.

“The sale’s lackluster performance suggests that key fears related to sub-prime/credit/housing issues may be playing out in the U.S.,” Banc of America Securities analyst Dana Cohen said in a note to clients.

Sotheby’s shares dived $14.23, or 28%, to $35.84. The stock had hit a record high of $57.64 on Oct. 10. It’s still up 15.5% this year.

Some experts have been predicting an end to the 11-year bull market in fine art. In August, Southern California billionaire and art collector Eli Broad predicted art prices would fall amid credit-market losses at hedge funds and other collectors.

Sotheby’s went into Wednesday’s Impressionist sale with significant risks. Guarantees were handed out for art with an estimated price range of $153 million to $209 million before commissions, based on data in the sale catalog, analyst Kristine Koerber of JMP Securities said.

Of 26 lots guaranteed, five didn’t sell and 10 sold below Sotheby’s estimated range, Koerber said.

“While we never comment on individual guarantees or [total] guarantee profits,” Sotheby’s spokeswoman Diana Phillips said in an e-mail, “we have made money on our overall guarantee portfolio year after year and it is our current expectation that we will do so this year as well.”

Van Gogh’s “The Fields (Wheat Fields)” received no bids and didn’t sell. The guaranteed painting was valued at $28 million to $35 million. Georges Braque’s “L’Echo,” expected to go for as much as $20 million, also failed to sell and carried a guarantee.

“You are looking at an auction market that has come from the speed of light to the speed of sound,” said Steven Pincus, who runs insurer DeWitt Stern Group’s fine-art practice.

Another test of the art market comes Wednesday, when Sotheby’s plans a major auction of contemporary works.

Sotheby’s carries bigger liabilities for the contemporary sale, with about 78% of the estimated low value guaranteed, Koerber said.

The company today will report its third-quarter earnings.