In a blow-by-blow rebuttal to Grant Thornton’s letter to the SEC last week, Overstock.com‘s Chairman & CEO, Patrick Byrne, laid it all out in a very public way via a press release. A bit on the ugly side, but a fascinating look inside the interaction between a board and their auditor. It has devolved into an outright pissing match (Henry Blodget‘s term) between the two companies, with both sides accusing the other of lying.
What is particularly alarming about this whole affair (other than the openness of the mudslinging), is the size of the drop in OSTK’s value on Friday the 30th. Gapping up on Monday the 23rd and hitting a high that day of $16.37, it has since given up over $2.00 in two sharp drops. The first was in the early hours of trading on Tuesday (from $16.18 to $15.50), after Mr. Byrne’s press release hit the wires. Just before the markets closed for the Thanksgiving holiday, OSTK was at $15.30. However, on Friday, the 27th, it opened down at $14.42 and has continued to hover below $14.50 today. Black Friday will forever mean something else within the walls of Overstock.com I suspect. All of this, despite their marketing engine churning out multiple releases regarding holiday promotions.
Perhaps airing your audit issues so openly, and through press releases, should be reconsidered as a strategy.
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Tracy Coenen over at The Fraud Files Blog, has a great continuation of the Overstock.com story along with links out to the actual SEC filings. Great work Tracy in tracking all the details down.