Patrick Byrne, the flamboyant entrepreneur who has run Overstock.com for two decades resigned from his role as chief executive officer after bewildering investors last week with claims about entanglements with the “Deep State.”
Byrne, 56, whose departure as CEO and from the board takes effect Thursday, will be succeeded by director Jonathan Johnson on an interim basis. Johnson has been with the company for 17 years and has recently served as president of Overstock’s blockchain business, Medici Ventures.
“While I believe that I did what was necessary for the good of the country, for the good of the firm, I am in the sad position of having to sever ties with Overstock,” Byrne wrote in a more than 1,600-word statement. He founded the company in 1999 and took it public three years later.
In a controversial career that included knock-down battles with short sellers and a foray into cryptocurrency, it was Byrne’s personal claims about a romance with a Russian agent and his involvement in federal election investigations that ended his tenure at Overstock. Before rallying today, shares were down 22 percent since the company published his statement on Aug. 12.
Passages in that release confused Wall Street and left some wondering about Byrne’s stability. “Starting in 2015 I (operating under the belief that I was helping legitimate law enforcement efforts) assisted in what are now known as the ‘Clinton Investigation’ and the ‘Russian Investigation,”’ it read. “It was the third time in my life I helped the Men in Black.”
That statement quoted Byrne as saying the probes were “less about law enforcement and more about political espionage.” He elaborated in a subsequent New York Times interview, saying he came public this month because of concern about the U.S. government’s prosecution of Maria Butina, with whom he claimed a romantic relationship. Butina is serving an 18-month prison sentence for failing to register as a Russian agent.
Shares surged as much as 18 percent to $22.95 in New York Thursday after being halted for the announcement. They later pared gains to 5.5 percent
“This is a tremendous catalyst for the stock,” said D.A. Davidson’s Tom Forte, one of only two analysts on Wall Street covering Overstock. “I think the latest controversy was one too many.”
Byrne was well known for unusual behavior. He sued brokerages over claims tied to naked short-selling in 2007 and has said the banks settled the case for tens of millions of dollars. He’s compared an Overstock executive to a Star Trek character in announcing her promotion. He likened Overstock’s cryptocurrency ambitions to Jonas Salk’s polio vaccine and joked on a conference call in recent weeks about loaning office space to the SEC amid an investigation into the company’s tZero push.
Overstock has been considering selling its online retail business and Byrne’s departure will probably accelerate that process, according to Forte, who is bullish on Overstock.
“I think his legacy will be the shareholder value created on the blockchain investments,” he said. “He saw the writing on the wall early on.”