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Feb. 22, 2020, 10:12 a.m. EST

A bunch of traders just bet big on this ‘massive turnaround play’ in hopes of scoring a short-term windfall

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By Shawn Langlois, MarketWatch


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Time for that bounce?

Lumber Liquidators still hasn’t recovered from that damning “60 Minutes” report in March 2015, which knocked the stock off its $100-plus perch and ultimately all the way down into single digits, where it’s been stuck for months.

In Thursday’s trading session, however, the stock /zigman2/quotes/202539569/composite LL -1.85% showed some serious signs of life early, rallying 27% to $10.40 to buck the pullback on the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.36% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.62%  .

One corner of the internet seems to believe there’s more to come. A lot more.

On Reddit’s WallStreetBets board, where risk-on never seems go off, a contributor going by the NSFW name of closethef***inglight laid out several reasons as to why he believes there’s a “massive turnaround play” taking shape.

Here are three of the bulletpoints of his bull case:

1. The housing and renovation indexes ITB /zigman2/quotes/203468436/composite ITB -0.88% and XHB /zigman2/quotes/202739297/composite XHB -0.34% are now at all time highs. LL has been lagging, but the same-store sales comps going forward are super easy because the company had a terrible 2019 .

2. The company will receive $25 million from the government because they overpaid on tariffs last year. They are literally getting a check for $25 million .

3. Short interest in LL shares is almost 40%. When this stock starts running there will be an epic short squeeze, even worse than what happened with Tesla /zigman2/quotes/203558040/composite TSLA +0.13%  .

So what does he do? He loads up on 25,000 shares and buys some calls — with plans to buy more — ahead of what he sees as a big earnings day next week.

“I really do believe in the company,” he wrote. “And I see it as a much safer bet than some of the tech stuff which it trading at massive valuations.”

Here’s what he says his position looks like:

Of course, he’s just some guy on the internet, but his bullish moonshot seemed to rally the troops, who are always up for a “YOLO” roll of the dice.

So far, so good, apparently:

Read closethef***inglight’s full post here .

/zigman2/quotes/202539569/composite
US : U.S.: NYSE
$ 22.86
-0.43 -1.85%
Volume: 829,436
Aug. 4, 2020 4:00p
P/E Ratio
24.59
Dividend Yield
N/A
Market Cap
$671.10 million
Rev. per Employee
$493,016
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,306.51
+11.90 +0.36%
Volume: 2.40B
Aug. 4, 2020 5:20p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,828.47
+164.07 +0.62%
Volume: 355.46M
Aug. 4, 2020 5:20p
loading...
/zigman2/quotes/203468436/composite
US : U.S.: Cboe BZX
$ 52.02
-0.46 -0.88%
Volume: 1.99M
Aug. 4, 2020 4:00p
loading...
/zigman2/quotes/202739297/composite
US : U.S.: NYSE Arca
$ 50.10
-0.17 -0.34%
Volume: 2.15M
Aug. 4, 2020 4:00p
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 1,487.00
+2.00 +0.13%
Volume: 8.41M
Aug. 4, 2020 4:00p
P/E Ratio
773.87
Dividend Yield
N/A
Market Cap
$276.75 billion
Rev. per Employee
$439,627
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Shawn Langlois is an editor and writer for MarketWatch in Los Angeles. Follow him on Twitter @slangwise.

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