Tech

Overstock plunges for a third straight day after CEO comments on 'Deep State'

Key Points
  • Shares of Overstock fell for the third day in a row following CEO Patrick Byrne's comments on the 'Deep State.'
  • In a statement on Monday, Byrne responded to claims of his involvement in the federal government's investigation into the 2016 election. 
  • Overstock shares had been on an upswing after the company reported second-quarter results. 
Patrick M. Byrne, chairman and chief executive officer of Overstock.com
George Frey | Bloomberg | Getty Images

Overstock shares plummeted more than 22% on Wednesday, marking their third consecutive day of losses since CEO Patrick Byrne made controversial comments about his role in the "Deep State."

Byrne released a statement Monday responding to claims in a blog post of his involvement in the federal government's investigation into the 2016 election. In it, he referred to federal agents as "the Men in Black" and said he assisted in investigations related to the Clintons and Russian interference.

Overstock has plunged about 36% in the three trading days since Byrne's comments. The e-commerce company is now worth less than $600 million.

"I will speak no more on the subject," Byrne said in a 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 the Rule of Law in our country."

The comments caught analysts' attention, with D.A. Davidson's Tom Forte citing their potential to hurt Overstock's financials.

"Having read the articles, we see the potential for the situation to have a negative impact on Overstock's operating results, given the controversy around the subject matter," Forte wrote in a research note. "As such, we will continue to monitor the situation to see if it does, in fact, impact the company's performance."

Overstock shares had been on an upswing since Thursday, after the company reported a narrower-than-expected loss for the second quarter. An Overstock spokesperson didn't immediately respond to a request for comment.

In addition to this week's controversy, Overstock faces an ongoing probe by the Securities and Exchange Commission into its cryptocurrency offering. Overstock's subsidiary, tZero, planned to raise $250 million through a token sale and develop a trading platform for digital token securities.

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