The Lovesac Company (NASDAQ:LOVE)

LOVE has an interesting product and a promotional CEO, which has enabled the company to get to its status today with 77 showcase stores in malls across the country, sitting on contract after contract with unfathomable annual operating lease payment obligations for the next 10 years. The entire public offering was, in my view, a way for the CEO to cash out (though he's still doing it, so he'd rather you not know that yet) along with a couple PE players that never had much in a way of a strategic relationship with the company. One simply funded it with growth capital long ago, which LOVE quickly burned through. With fear of losing 100% on that investment, that firm was able to coax a buddy over at another PE shop to go in with him on one more round, this would be a bridge financing just to take the company through to the IPO (thereby allowing the original PE investor to recover his reckless investment). And that's exactly what they did. The addressable market for sectional couches, however adjustable, that cost over $6,000 simply is not going to grow much further relative to existing penetration. As LOVE elected to take a "direct-to-consumer" marketing approach (or somehow upset AMZN), AMZN has another maker of identical bean bags, as well as its own copy, all over the site for better prices. I get a feeling it was either a decision of LOVE or one of AMZN not to include the company in its new Furniture Sales Marketplace, where local vendors can go online and list product to offload to customers nearby. AMZN sold $4.1B in furniture last year, yet somehow it isn't an "omni-channel threat this management team has even noticed?" That's foolish. And when management teams say foolish things, they're usually either bad people or they think you're the fool. Not today folks. The company will need to raise cash within the next 18 months, 100%. Nice bean bags, though. - Emma Muhleman, CFA, CPA