Lumber Liquidators Stock Hits 52-Week Low After Settlement in Formaldehyde Case

Lumber Liquidators shares tumbled to a 52-week low Oct. 22 to $12.19, 10 days after a district court approved the company’s $36 million settlement in a high-profile class-action lawsuit over formaldehyde levels in its Chinese-made laminate flooring sold between 2009–2015.

The company’s shares have struggled since a 2015 60 Minutes investigation on the company’s Chinese-made laminate’s formaldehyde levels, which were found to have exceeded the California Air Resource Board (CARB) limits, leading to a number of lawsuits and fines.

The latest plunge in share price might not be viewed negatively by all, however, and could represent an opportune time for investors to purchase low shares before a possible rebound in the stock occurs, Equities notes in an analysis of the stock.

The recent 10 percent tariffs on Chinese flooring products could have a negative impact on the company as well. Lumber Liquidators imports approximately 40 percent of its merchandise from China, according to an analysis by Seeking Alpha, and may see its profits take an additional hit in the midst of the trade dispute.

Lumber Liquidators has made gradual strides in revenue since the 2015 scandal sent it reeling, and is slated to report its third-quarter earnings Oct. 30.

Lumber Liquidators had a net income loss of $1.5 million in the second quarter of 2018.

A graph depicting the trajectory of Lumber Liquidators' share price since January 2014. Source: MarketWatch