What Happened?
Shares of furniture company Lovesac (NASDAQ: LOVE) fell 5.7% in the afternoon session after the announcement of an investigation by the Trump administration that will lead to higher tariffs on imported furniture.
President Trump stated that the investigation will be completed within 50 days, after which new tariffs will be imposed on furniture from other countries. This move adds to recently increased tariffs on imports from China and Vietnam, the top two sources of imported furniture.
The news prompted a warning from Telsey Advisory Group, which called the proposed tariffs a 'significant blow' to an industry already grappling with a challenging demand environment and a weak housing market. The potential for higher prices comes as consumer spending on discretionary items is already slowing, with tariffs likely to be passed on to consumers, potentially further reducing demand.
The shares closed the day at $18.12, down 5.2% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lovesac? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Lovesac’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock dropped 3.4% on the news that markets continued to decline, as investors grew cautious ahead of a key speech by Federal Reserve Chair Jerome Powell. The move came as U.S. equity markets recorded a fifth consecutive day of losses for major indexes like the S&P 500, with technology stocks experiencing the largest declines. Investors have grown wary that the sharp rally in the tech sector since April may have advanced too far. The market-wide caution is largely driven by the upcoming Jackson Hole symposium, a meeting of central bankers, where traders are anxiously awaiting Fed Chair Powell's speech on Friday for guidance on the future path of interest rates.
Lovesac is down 24.3% since the beginning of the year, and at $18.11 per share, it is trading 53.1% below its 52-week high of $38.64 from December 2024. Investors who bought $1,000 worth of Lovesac’s shares 5 years ago would now be looking at an investment worth $644.94.
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