Sotheby's Plunges 36% on Lackluster Auction, Downgrades

Shares of art auctioneer Sotheby's plunged 28.4% Thursday after a weak Wednesday auction prompted analysts to cut the stock's ratings. With total sales of under $270 million, Sotheby's Impressionist and modern art auction fell far short of its low forecast of $355 million and analyst estimates of as much as $557 million. "Tepid results for a major sale suggest cloudier macro outlook for the art market," Bank of America analyst Dana Cohen told clients, lowering the firm's shares to Neutral from Buy. Three key areas may have contributed to the sale's weakness, Cohen said: U.S. hedge funds, China economic growth, and Russian commodities. Several high-profile works went unsold, while others came up short of estimates. Van Gogh's "The Fields (Wheat Fields)," which was valued at $28-35 million, received no bids. "It wasn't just several paintings that failed to draw bidders but most of the paintings," JMP Securities analyst Kristine Koerber wrote. "What happened to all of the bidders?" Rival Christie's International, the world's largest auction house, barely beat its low estimate during its Nov. 6 impressionist sale, and missed its top estimate by about 29%. Cohen sounded an ominous note: "These data points suggest to us heightened risk, that it may be happening sooner than we previously anticipated."

Sources: AP, Reuters, Bloomberg
Commentary: Sotheby's Tanks: Is the Market Next? • There's No Speculative Bubble in the Art World • Art, The Market and The Economy
Stocks to watch: BID

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