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What: On the heels of last week's plunge following a negative 60 Minutes report, shares of Lumber Liquidators Holdings Inc (NYSE:LL) were down another 14.6% as of 3 p.m. Monday, after CNBC revealed a federal regulator is examining whether its products are unsafe.
So what: Specifically, CNBC says, the government's Consumer Product Safety Commission (CPSC) confirmed it has reached out to CBS to request the results cited in the 60 Minutes report. For reference, shortly after the initial report aired, U.S. Sen. Bill Nelson, D-Fla., asked three federal agencies -- including the CPSC -- to launch official investigations into whether Lumber Liquidators' products violate California Air Resource Board regulations as 60 Minutes' tests allege. According to CNBC, the CPSC stopped short of confirming such an investigation.
Now what: To its credit, Lumber Liquidators has steadfastly denied the allegations, insisting its floors "are completely safe to use as intended." It also voiced its belief that a small group of short-sellers are to blame for the attack on its stock, and stated "60 Minutes used an improper test method in its reporting that is not included in CARB regulations." Lumber Liquidators has also scheduled a conference call on March 12 to provide a business update.
Nonetheless, in the meantime, Lumber Liquidators is left battling to maintain its rapport with skittish consumers, as well as defending itself in the face of multiple class action lawsuits. At this point, the company seems likely to suffer a significant financial burden regardless of whether the 60 Minutes' report has merit. While I'll admit that could mean an incredible buying opportunity for patient, long-term investors, I'm personally content watching this unfold from the sidelines for now.
Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Lumber Liquidators. The Motley Fool owns shares of Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.