What happened

Shares of Lumber Liquidators (NYSE:LL) fell more than 10% on Friday after the company's founder said he would not seek to take the company private. A takeover represented the best chance investors had of a quick recovery in its stock price, and so shareholders were understandably disappointed with the update.

So what

Lumber Liquidators has suffered from some of the same woes as other consumer stocks, with the company in August lowering full-year guidance due to lower foot traffic and trade uncertainty. But the shares got a boost in early September after founder Thomas D. Sullivan said he was working on a plan to take the company private.

A male worker holding a measuring tape while kneeling on a floor with pieces of carpet.

Image source: Getty Images.

Sullivan backed away from those plans on Friday, telling Bloomberg that although he will continue to monitor the situation, Lumber Liquidators' share price was now too high to consider a bid. Sullivan's F9 Investments in a regulatory filing disclosed that earlier in the week it sold down its stake in Lumber Liquidators to 1.6% from a reported 7.7%.

"Due to the significant price appreciation of the stock price since the initial Schedule 13D was filed, the reporting persons, as of Sept. 11, 2019, believe that the common stock is no longer undervalued," the filing said.

Now what

Sullivan's initial plan was to team with private equity buyers to combine Lumber Liquidators with his current company, Cabinets to Go, and push the brand back toward its original model of keeping overhead costs low and using its scale and cost structure to compete against smaller retailers.

LL Chart

Lumber Liquidators' wild 30 days, data by YCharts.

The founder could rekindle the interest should Lumber Liquidators shares return to their pre-speculation levels, but his sell down of the shares could be viewed as an indication that he is not preparing to rush back in.

There is still a case for a Lumber Liquidators turnaround, but that process, even if successful, is going to take a long time to play out. The easiest way out for Lumber Liquidators is now apparently off the table.