What happened 

Shares of Sotheby's (BID) plunged 20.1% in May, according to data provided by S&P Global Market Intelligence, after the auction specialist reported first-quarter earnings that failed to live up to expectations. 

So what 

Revenue for the quarter dropped 15% to $923.3 million and an adjusted net profit of $5 million in the year-ago period swung to an adjusted loss of $6.9 million, or $0.15 per share. Analysts were expecting a loss of $0.12 per share, but Sotheby's couldn't even live up to that. 

Falling stock chart superimposed over columns of blue numbers

Image source: Getty Images.

The first quarter is a seasonally weak quarter, so losing money isn't a big surprise. But investors feared that a 15% decline in auction sales and a 19% drop in private sales would continue throughout the year. 

Now what 

Results can be extremely lumpy in the auction market, but investors have been concerned for a while that auction spending has hit a peak and high-end consumers are going to slow their spending as the economy and stock markets cool. We may be seeing early signs of that in Sotheby's Q1 report, and that's why the stock moved so sharply. The long-term fundamentals of the business haven't changed because the company is still dominant in auctions, but results this year may not be as strong as previously hoped.