This goes higher from here without a doubt. LL being absolved from any CARB violation has removed a tremendous amount of potential legal liabilities for them AND has proven the "60 Minutes" special to be a farce.
This isn't just price action here. There is finally some real substance to move this higher. A typical revenues multiplier for the peer group could easily push LL into the ~$40 range. This goes to $20 on trading action alone.
Sentiment: Strong Buy
He could could easily lose a bigger percentage than he gained shorting it last year. A run to $20 would be a massive loss for an $11 short sale.
Sentiment: Strong Buy
I feel a lot more comfortable holding a long position than I would being short. Without the legal liabilities from CARB compliance I think it's actually plausible for a Home-Depot, Lowe's, or private equity firm to consider a buyout offer. The current SP is well under one-half of revenues. That is incredibly cheap in relation to any other comparable building materials retailer.
I know some longs here post updates on the legal liability front. Any opinions to offer about LL being able to collect on liability insurance now that CARB has stated that there was no violation of the safety standards committed?
I believe their insurers refused to pay any legal costs related to safety lawsuits and they would not cover the cost of any product recalls if they occurred. I'm not aware of all the details, but I know some others on here may be able to chime in on that.
I'm long here, but you've got to be kidding if you call this "holding up well". I'm stunned that the price has retraced downward this hard after such a positive outcome on the CARB compliance issue. That was the single largest substantive development in the last 2 years and the market, to this point, has basically shrugged off the news. This ran up above $20 per-share after the Lacey violations were settled last fall. Now any good news is met with a barrage of attack articles.
Yeah, LL is doing a Billion in revenues but it's only worth about 3x the settlement for Hulk Hogan's sex tape. That isn't an often used metric, but I think it's an indication that Mr. Market has this one under priced.
"lucky it is over 10"? Maybe, but I think the SP is more than factoring in the negatives now.
CPSC will not demand a recall because LL hasn't been found guilty of ANY product safety compliance violations, NONE. There wasn't even a standard for emission outside of California and CARB has exonerated them from any formal compliance violations.
60 Minutes almost drove Audi out of the United States back in the 1980's with a muckraking story. They were able to bounce back from it though. LL will be able to do the same I think. Thank goodness that LL doesn't have any debt on the balance sheet.
Anybody doing their due-diligence researching this will come to the realization that the "smoking-gun" is failing to materialize against LL. Any sign that comps are going to improve will be the death-knell of a short thesis.
A return to profitability will double or triple the sp.
Oh, 60 Minutes, and their phony interviews were worded carefully to avoid anything libelous that would get them into trouble. Lots of "we believe" statements and half-truths. 60 Minutes' baloney would William Randolph Hearst blush.
Last month the CPSC stated "Lumber Liquidators has cooperated with the CPSC since the beginning of our investigation and discussions with the company are ongoing." That sounded a slightly positive tone in my view.
Since then CARB has exonerated LL, and CDC did not recommend removing any flooring.
How do you think the stock react if CPSC does not demand a product recall? Is it another "suckers rally", does it result in a sustained increase in sp, or is it meaningless until the bottom line improves?
CARB did not state there was a violation of CARB 2, so settlement is unlikely at best.
I need to look into the class action more, but the last thing I saw is that the plaintiffs were compelled to have a flooring sample removed from the home and tested.
Unfortunately 60 minutes can't be held liable for a third party that thought the flooring was dangerous in their opinion.
That article was almost as bad as saying "Everybody that ever drank water died!" It's just silly, but you can spin almost any fact into a negative, and that's what was done to LL.
It almost looks as if CPSC has "punted" and deferred to the CDC, who found no certain danger. If there was a recall they would make a statement. Otherwise there may never be any more commentary by CPSC.
If LL posts any perceivable improvement in revenues or earnings I think it puts a short in an incredibly weak position since their is almost no propable catalyst left for a major fail. As I've said before, the smoking gun has simply not materialized and most of the potential sources have already exonerated LL.
Oh, I agree that it's muckraking journalism, but make no mistake, they've been doing the same thing for decades. They know exactly what they can and cannot put on the air. They won't ever get a reprimand of any kind for the LL story.
I'm long here, I just know that a retraction of any kind will not happen. The best thing that will happen is 60 minutes will give it a rest and move on at this point.
I've got a few cars too. I'm finishing a project Mustang right now. I put a late model DOHC "Coyote" 5.0 into a '92 notchback and am about to get it on the road.
Yeah, the pull-back was on paltry volume. I think small-time traders are thinking $13 is "safe". When substantial trading volume happens this is running up quickly.
These little green shoots could be a canary in a coal mine.