by Reggie Osborne II
Follow @reggieosborne on Twitter, friend me on Facebook or Google+.
Something happened Sunday night. Pirates tried to kill Lumber Liquidators. By the time the sun came up, the Lumber Liquidators ship was sinking fast. Now they’re bailing water, and preparing to fight back.
Let me explain.
In case you don’t know, Lumber Liquidators is a company that sells flooring. They sell it out of storefronts, and they sell it online. It’s been a huge success. My wife and I bought flooring for most of our house through their website then picked it up at a local store. So have a lot of other people. The company’s stock price has been a bit of a roller-coaster, but very profitable.
Then came Sunday night’s episode of 60 Minutes. The CBS reporting juggernaut that prides itself in its investigative journalism ran a segment on Lumber Liquidators, and boy was it bad news for the company! According to 60 Minutes, Lumber Liquidators has been selling tons of laminate flooring that contains unreasonably high levels of formaldehyde – the stuff that causes asthma, leukemia, and other kinds of cancer!
Just stop for a second and ask yourself: if I wanted to ruin a company, what would be the worst possible story I could come up with to absolutely destroy them? Could I come up with ANYTHING that compares to the story 60 Minutes reported?
I mean, if the report from 60 Minutes is true and can be proven in a courtroom, this is the end of Lumber Liquidators. It would be better for them to be caught in the middle of a prostitution ring than to be knowingly selling flooring that causes leukemia and other kinds of cancer! Can you even imagine the potential cost involved with removing all the laminate flooring they’ve sold, replacing it, and paying all the medical claims that would undoubtedly be made against them?
Forget it! They’d be finished!
And, by the way, the 60 Minutes report is totally believable. Lumber Liquidators buys most of their laminate flooring from Chinese manufacturers. Anyone who has worked with Chinese manufacturers could tell you that the inspection process is not always on the up-and-up, and when it comes time to actually mass produce a product, every importer has essentially two choices: the legit way, or the cheaper, somewhat-legit way.
So it’s very believable that Lumber Liquidators has been using sub-standard material in its laminate flooring and making a killing by beating out their competitors who’ve been paying (and charging) more money for the proper material.
But wait – wasn’t there something about pirates in the title of this article? Yep!
Enter into the scene the actual attackers of Lumber Liquidators, because if you thought CBS’ 60 Minutes came up with this “investigative report” on their own, then I’ve got a bridge to sell you!
See, in the financial world there are basically two types of bets. You can either bet that a company is going to do well by buying their stock, or you can bet that a company is going to do bad by “shorting” their stock. And without going into too much detail, let’s just say that if you’re shorting a stock, you want that company’s stock price to go DOWN, DOWN, DOWN. And if it goes down quickly, that would be even better!
See the people who buy stock are like cheerleaders. They root for that company. They tell their friends how great the company is. They cling to any good news that the company reports.
But the people who short stock are like hecklers. They’re boo-birds. They’re worse actually, because a heckler just stands up and screams, “You SUCK!” But if you’re shorting a stock, you do more than stand up and scream. You find reasons to stick the refs on them. You accuse them of cheating. You officially protest every win. You wait for them in the hallway after the game and hit them in the knees with a baseball bat.
Well as it turns out, some pretty powerful people decided awhile back to short Lumber Liquidators, and they’ve launched all kinds of attacks at the company. They’ve sued them, they’ve accused them of cheating on their financial reports, and now they’ve persuaded 60 Minutes that they might be selling cancerous death sticks instead of normal laminate flooring.
This is the equivalent of a Tonya Harding baseball bat to the knee. This is the pirate ship that sails up alongside the unsuspecting freight-liner in the night and fires every single cannon at the same time just to see how fantastically they can sink the other ship.
And boy was it sinking this morning! Lumber Liquidators’ stock price dropped immediately by more than 20%. It dropped so quickly that they had to stop all trading! That’s the kind of stuff that happens when the sky is falling and the CEO excuses himself to go jump out of the 30th-floor window. They stopped trading! Then they fired back at the 60 Minutes reports with everything they had.
It’s been quite the spectacle, and if you’re a private company thinking about going public on the stock exchange, you should certainly be thinking twice this morning. After all, the pirates can essentially go after anyone they want. It’s so much easier to run a smear campaign than to defend against one.
Now there’s a lot of different ways this could play out. Lumber Liquidators could successfully prove that there’s nothing wrong with their laminate flooring. If they do that, this whole fiasco is still going to hurt them because defending against these types of allegations is expensive. The same type of thing happened to LINN Energy recently, and even after they proved that all the accusations were false, the company’s still in the tank.
Or, the pirates could actually be right. After all, this is Wall Street. The people who run these big companies do, on occasion, lie. And if they can actually prove that Lumber Liquidators knowingly did this, then people are going to go to jail, and the company is finished.
More than likely, something in between will happen. There probably is bad flooring out there (and maybe a lot of it), but if Lumber Liquidators can shift blame to the mills and the inspection agencies (which are certified by the state of California), they’ll take a hit as a company but survive.
However, as dramatic as all this is, one question matters to me more than anything else: DO I HAVE CANCER-FLOORING IN MY HOME?!
Isn’t that what every other average person is wondering because of this? And unfortunately, if I want to the know answer, it’s fairly expensive to find out!
A one-time, disposable formaldehyde test can be bought for about $100, but if you go that route, you can only test one area of your home. Also, formaldehyde levels change with the seasons and climate, so just because your test looks good now doesn’t mean you’re safe in six months when when summer rolls around.
The other option is a formaldehyde monitor. Just like a carbon monoxide monitor, these stay on all the time and give you an up to date measurement. However, their are only one or two reliable ones that are made, and they cost a ton! Like $400!
You can get a cheaper Chinese version, but isn’t that somewhat ridiculous? Why would you buy a cheap Chinese version of a formaldehyde monitor to test the cheap Chinese version of flooring that got you into trouble in the first place? If you can’t trust the flooring, how good are you going to feel about that monitor? This is CANCER we’re talking about!
Now I could go on and on and on about financials and sickness and companies and testing devices, but for me – that’s not the point. At the end of the day I’m going to do what I have to do to check the air in my home and hope for the best.
The real point of this whole article is just to say that last night, when I went to sleep, I had no idea that I was potentially breathing cancerous formaldehyde air into my lungs. I didn’t know my children might be breathing cancerous air. I didn’t know any of this even existed as a potential danger. Formaldehyde, in my mind, was just the stuff that smelled horrible in biology class when we dissected things.
And now? Well…now I have reason to be concerned, and it makes me wonder: how does anyone survive in this world without a faithful relationship with God that they can rely on and trust?
We are so ignorant to the details of 99.999% of the things that we do on this earth. I’m a person who tries to be informed, and I’m still no better off than most anyone else. If I can’t trust that God’s in control and working all things out for the good of those who love Him (Romans 8:28), then I don’t know how in the world I’d keep from worrying myself to death.
I would have to constantly distract myself with television, movies, sports, parties, the internet, social media, games, adventures, relationships, drugs or some combination of all those things just to keep myself from dwelling on the fact that at any moment I could be stricken with cancer from something as innocent as a flooring selection I made three years ago! And I guess that’s exactly what people do! They don’t think about danger and death until they have to!
Well, this morning a whole bunch of people woke up and realized that now they have to. Thanks a lot, 60 Minutes. Thanks a lot, Lumber Liquidators. Thanks a lot, stupid pirates!