Overstock sell-off reaches 36% after CEO’s ‘deep state’ comment
Overstock.com Inc. shares fell for a third day Wednesday as investors reacted to statements by Chief Executive Patrick Byrne that he was a part of federal investigations related to the 2016 election.
The e-commerce company has lost a third of its value in the two days since releasing a statement by Byrne titled “Overstock.com CEO Comments on Deep State” and referring to federal investigators as “the Men in Black.” The stock fell another 22% on Wednesday, bringing its slide to 36% since Monday, the biggest two-day slump in more than 11 years.
Byrne’s statement addressed stories published on a little-known news website and referenced investigations relating to Bill and Hillary Clinton and Russian interference in the U.S. elections, political espionage and the rule of law.
“I will speak no more on the subject,” Byrne wrote in the statement. “Instead, having lived in places lacking Rule of Law and having witnessed the consequences of its absence, I plan on sitting back and watching the United States Department of Justice re-establish Rule of Law in our country.”
The unusual comments are not the first to be uttered by the Overstock founder. He sued brokerages over claims tied to naked short-selling in 2007 and has said the banks settled the case for tens of millions of dollars. He’s compared a company executive to a “Star Trek” character in announcing her promotion, and has signed communiques to stockholders with the words “your humble servant.” He likened Overstock’s cryptocurrency ambitions to Jonas Salk’s polio vaccine and joked on last week’s conference call about lending office space to the Securities and Exchange Commission amid an investigation into the company’s tZero push, comments which briefly sent the shares tumbling.
“What you have here is a highly controversial CEO and another example of something that’s controversial,” D.A. Davidson analyst Tom Forte said in an interview. He has a buy rating on the stock. “There are times like right now where that has a negative impact on the performance of the stock.”
Overstock had been riding high after investors cheered the company’s second-quarter earnings report on Thursday that revealed a narrower-than-expected loss before interest, tax, depreciation and amortization. The stock closed the week at the highest levels since October. Now, the two-day slide has erased more than a month of gains.
“The frustrating part is that the legacy home e-commerce business has returned to positive cash flow,” said Forte, one of two Wall Street analysts covering the company. “The two assets — e-commerce and blockchain — are incredibly well positioned.”
Representatives for Overstock didn’t respond to a voicemail message or e-mail seeking comment Wednesday.
Wittenstein writes for Bloomberg.
