Sotheby’s Shares Have Volatile Trading Day in Wake of Earnings Call

Sotheby’s stock went on a roller coaster ride on Monday as shares slumped at the open after the first quarter earnings revealed a $25m loss. But as traders digested the news that an “outside investor” had declared an interest in acquiring up to 10% of the company, either by acquiring the stake of others or through open market purchases, the stock rose sharply throughout the day:

“We continue to think BID may be better suited as a private company and bought as a ‘trophy asset’ long term,” David Schick, a luxury analyst at Consumer Edge Research LLC, said in a research note on Monday. He added that “talk of a meaningful buyer reminds investors of this view — this outside investor conversation could mean any type of firm of course, but long-term owners of luxury brands come to mind.”

The announcement seemed to give CEO Tad Smith an abundance of confidence about the company’s future:

“When I said in the prior earnings call that we are going to have one or more bad quarters I think we are going to keep it to one,” he said Monday. “I feel good about things.”

Sotheby’s Says Investor May Boost Stake to 10%, Shares Gain (Bloomberg)