Lumber Liquidators is tanking
After rallying this week, shares tanked by up to 7% to around $33.50 in morning trading on Friday.
Earlier Friday, Goldman Sachs downgraded the firm to "Neutral" from "Buy" on concerns that it has not adequately answered questions about the testing procedure for its laminate flooring, and this could dent sales.
Lumber Liquidators held a conference call on Thursday to address the fallout of a "60 Minutes" episode that aired March 1. The report indicated that the company's flooring sourced from China contains levels of formaldehyde that are toxic, and exceed standards set by the California Air Resources Board (CARB).
But the company has said "60 Minutes" used an improper test that is not vetted by regulators, and produces results that may be inaccurate.
Shares of Lumber Liquidators rallied by as much as 10% on Tuesday after short-seller Citron Research said in a note that if the flooring is indeed toxic, CARB would have asked customers to tear them out. Citron said the sell-off, which started after Lumber Liquidators announced it would be the subject of a "60 Minutes" episode, was overdone.
Since the episode aired, shares have tumbled over 40%.
Lumber Liquidators said total net sales fell 7.5% in the nine days after the episode aired; this was worse than Goldman expected.
Here's what today's plunge looks like:
