The financial press has been filled with hype lately about Sotheby’s share price rising to the stratosphere. Several weeks ago we commented on a blogger’s recent claim that Sotheby’s was the “ultimate bubble stock.” Not so, we argued, pointing out the company’s major progress increasing revenues through an exciting auction lineup, cutting costs and bringing greater geographic diversification to its client base.
Just a few days ago, an article called “Rocket Stock or Dud” by Rich Smith listed Sotheby’s as a stock primed for a correction. Not so, we would argue, at least not so assuming greater stock market health and reasonable sales at next week’s auctions of Contemporary art.
Today, Sotheby’s announced its Q1 results for 2010. Increased revenues of 87%, 14% decrease in operating expenses, a net loss of only $2.2 million for a normally slow first three months — these are the highlights. Although we will dissect the numbers in greater detail earlier next week, in short, we believe that Sotheby’s is doing everything right to please its shareholders and hardly represents a bubble or rocket stock primed to pop or crash. A leveling-out of sorts may still be in order, especially once the excitement of the spring auction season is gone, but investors have no cause for major worry at this point.