Shares of Martha Stewart's company fell more than 9 percent Friday after rising in early trade following the lifestyle trendsetter's release from prison.
Martha Stewart is no longer chief executive of Martha Stewart Living Omnimedia Inc., a company whose fortunes have been closely linked to its founder, but she remains one of the most famous businesswomen in the United States.
Shares in the company doubled in the five months she was behind bars, in part on investor optimism that business would improve after Stewart's legal woes were resolved.
The stock, extremely volatile over the past year, lost $3.20 to close at $30.75 on the New York Stock Exchange. Earlier, it rose as high as $37.
Shares remain up more than 200 percent since Stewart was convicted a year ago of lying to federal investigators about a personal stock sale. Most analysts who track the company have said they think its shares are overvalued.
"There is just a huge amount of media attention" focused on Stewart's release, said Dennis McAlpine, an independent stock analyst who has a "strong sell" rating on Omnimedia shares. "There is no other news other than that (Stewart) is getting out of jail."
Stewart was released from a West Virginia prison early on Friday, as had been widely anticipated. She is to serve another five months in home confinement at her estate in Bedford, New York, in affluent Westchester County north of Manhattan.
The media and merchandising company posted its second consecutive annual loss in 2004, hurt by diminished advertising at the flagship Martha Stewart Living magazine. More losses are expected in full-year 2005.
Analysts say the stock is subject to volatile swings, often based on market rumors, because many speculators have made bets on the stock without paying attention to the company's fundamentals.
Adding to the stock's volatility, an estimated 80 percent of the publicly traded shares have been sold short. Short sellers make bets stock prices will fall, but they can be forced to buy stock to cover their positions after a share rises instead of declining as they anticipated.
Stewart stepped down as head of the company in mid-2003 after her indictment, but she still owns a 60 percent stake and is the creative muse behind its magazines, TV programs and line of housewares and furniture.
Omnimedia had been trying to distance itself from its founder, stripping Stewart's name off the magazine Everyday Living and downplaying it on Martha Stewart Living. But Stewart is expected to make something of a comeback with a new daily lifestyle TV show and as the star in a prime-time spinoff of NBC reality show "The Apprentice."
