Sotheby's New York location

The only publicly traded auction house, Sotheby's, continues to be one of the most volatile companies on the market. Recent share prices reached a three-and-a-half year high in April, then had a dramatic plunge, followed by a more recent, dramatic rebound. What does it all mean?

Sotheby's three-and-a-half-year high was reached on April 5, when share prices closed at $54.35, a price not seen since October 2007. But then the outlook soured following disappointing results from their New York and Hong Kong auctions this spring. Pricesspiraled downward by 25 percent.

On June 16 the stock closed at a three-month low of $37.60 following a rough two months of news. Spring sales failed to reach the lofty heights that many expected, and the first quarter earnings report worried some investors. Although it was one of the best first quarters on record and revenues were up 17 percent, operating expenses were also up 16 percent.

The current upswing began in mid-June and has continued after Sotheby's record-setting £108,803,550 ($174,129,201) modern and contemporary evening sale in London on June 27. After a promising result from the June 15th "Evill/Frost Collection" sale in London, where British artists Stanley Spencer andLucien Freud both reached record prices, the share price quickly spiked.

So does the recent surge mean that the good times are here to stay? There's another component: Cost cutting. Prices continued to rise after the company announced last week in a filing with theSecurities and Exchange Commission that it will cut its staff in Italy and the Netherlands by 23, and take a charge of $4.3 million. The move means ending local auctions in the Netherlands and reducing sales in Italy. Strangely, according to Bloomberg, the restructuring plan is estimated to cost Sotheby's $10 million in revenue next year, yet save $7 million in expenses.