Overstock.com Inc. shares lost more than a quarter of their value Monday, the worst single-day performance for the stock in more than a decade.
Overstock OSTK, -25.25% shares declined 25.3% to $11.19 Monday, the second worst performance for the e-commerce company since it went public in 2002, trailing only a 41.1% decline on July 18, 2008. The drop continued a horrid stretch for Overstock shares, which have fallen in seven consecutive trading sessions that add up to a decline of 58.1%, the worst seven-day stretch in Overstock history, according to information from Dow Jones Market Data.
Monday’s decline followed an announcement ahead of trading that Overstock’s chief financial officer had resigned and that the company’s retail business would not live up to financial expectations in the back-to-school quarter. Overstock said CFO Greg Iverson will be replaced on an interim basis by Robert Hughes, who worked in Overstock’s finance department for many years and will also remain president of Medici Land Governance, one of Overstock’s blockchain-based ventures.
Iverson resigned as of last Tuesday, Sept. 17, Overstock said Monday; the company did not provide a reason for the departure nor why the company waited nearly a week to announce the change. The date provides some clues, however: Overstock announced the next morning that a “digital dividend” that was expected to be dispersed this week had instead been changed and delayed after “feedback ... from industry participants, investors and regulators.”
The dividend was designed by Chief Executive Patrick Byrne before he dramatically resigned from the company last month amid claims of deep involvement in international political conspiracies. Byrne sold all his stock — more than 13% of the company — in a three-day sales binge at the beginning of last week, as the record seven-day decline was early in the making.
Byrne originally said in a blog post that he and an adviser decided to sell his shares after hearing “leaks” from the Securities and Exchange Commission to bankers on Friday, Sept. 13, concerning the SEC’s plans to combat the digital dividend. As trading began on that Friday, Overstock’s shares had gained 74% in the previous seven sessions as investors awaited the dividend, which was widely expected to squeeze short sellers as investors attempted to reclaim borrowed shares to secure the dividend.
Byrne changed that timeline after being asked if he had sold the shares while in possession of material nonpublic trading information from his time at Overstock. He then said on Twitter, and updated his blog post to reflect, that he had actually decided to sell the shares on Aug. 19, though he interchangeably used the date Aug. 22 — his departure date from Overstock — at times in various statements.
“Can the SEC come after me for trading on THEIR leaks? lol,” Byrne tweeted at a MarketWatch reporter on Saturday, while reportedly in Asia.
“Byrne continues to be a public figure, and the views he expresses and actions he takes are his own,” Overstock stated in its news release Monday morning, in a brief mention of Byrne’s stock sale.
Overstock also announced that Jonathan Johnson, who replaced Byrne on an interim basis, has been elected permanent CEO of the company by the board. The company said that it expects adjusted Ebitda to be break-even for the fiscal third quarter, after previously guiding for a profitable quarter by that measure. Overstock still expects to achieve positive adjusted Ebitda in the fourth quarter, and will provide a more detailed forecast update when it announces full third-quarter results.