plunged nearly 19% on Monday after the company announced plans for a follow-on offering.
The decline in the shares follows a long-running battle between shorts and longs over the direction of the online wholesale company, and after months of speculation about how the company would bolster its depleted cash reserves.
The company gave scant details about its offering. In a statement issued late Friday, Overstock said it planned to sell 1.5 million shares of stock in Dutch auction deal. W.R. Hambrecht will lead the offering, with assistance from JMP Securities, Overstock said.
A company representative did not return a call seeking comment.
The announcement came hours after the bell on Friday. In the market's first chance to react to the news, Overstock's shares traded as low as $29.81, off $6.79 or 18.6%, on Monday. In recent trading, the company's shares were down $4.75, or 13.0%, to $31.85.
Speculation has swirled about the company's intentions since February, when it filed a shelf registration that would allow it to sell up to 2.5 million shares. But as recently as March, company CEO Patrick Byrne
played down the rumors.
The company will need cash to build up its holiday inventory, Byrne acknowledged. But it has a large enough line of credit that it won't necessarily need to go to the public markets for cash, he said.
If the company sold the shares at its current stock price, it would more than triple its current cash horde. At the end of the first quarter, Overstock had some $20.32 million in cash and marketable securities, down from $40.35 million at the end of last year. At the company's current share price, its offering would raise some $47.49 million in cash.
The offering would be Overstock's third in three years. The company went public in May 2002, raising about $26.1 million through an auction-style offering managed by W.R. Hambrecht. The company raised another $24 million in cash last February through a secondary offering in which it sold 1.5 million shares.
Auction-style offerings seek to raise as much money as possible for the company offering shares by requiring potential investors to submit bids proposing a price and number of shares they plan to buy.
announced last month that it would conduct its initial public offering via a Dutch auction.