There's a bull and a bear case for Connecticut-based furniture maker Lovesac.

The bull case was made on Tuesday morning by its CEO, Shawn Nelson, following the release of fourth-quarter results:

"Amid considerable macroeconomic and consumer headwinds, Lovesac delivered very strong fourth-quarter and Full Year 2023 results that drove tangible value for our shareholders, customers, associates and business partners. Highlights in this regard include above 30% increase in total annual net sales to $651.5 million, total Comp Sales growth of 21.9% and an 8.7% increase in adjusted EBITDA to $60.4 million."

Nelson attributes the company's solid performance to the "scaling up" of three drivers of corporate growth. First is the company's omnichannel business model that engages and motivates customers.

Second, the Designed for Life proprietary products inspire and re-enforce passion and loyalty for the brand.

Third, an efficient and profitable operating platform.

Seven analysts also make the bullish case following the company's shares. They all rate their shares as a "buy," with a price target of $63.71%, 165% higher than the current levels.

The bear case is made by short sellers, as evidenced by the 27% short interest for its shares as of March 15.

The short-seller narrative is that, like other furniture makers, Lovesac was a beneficiary of the pandemic and the resilience of the housing industry.

But these days are over; therefore, the stock has nowhere to go but down, especially if the U.S. economy slides into a recession forcing consumers to cut down spending on discretionary items like furniture.

Still, Quo Vadis Capital President John Zolidis, a long bull on the company's shares, believes that this narrative is wrong.

"While acknowledging that LOVE probably received some incremental demand related to stay-at-home activities, our view has always been that LOVE is a company-specific product-cycle story, not a macro-demand driven business," he said in a letter to his subscribers. "We note that revenues grew 40% in FY19, without any benefit from Covid, and FY22 revenue's 25% growth isn't bad either."

Wall Street sided with Zolidis and the bulls, at least on Tuesday, following the company's fourth-quarter report, sending its shares close to 15% higher in early trading.

For FY23, Zolidis expects the company to see a tailwind to margins from lower distribution and freight expenses, but the big question is the top line.

"The Street has pegged revenue growth at 10%, which is below our model and seems conservative based on showroom openings and where we think the momentum was coming out of FY22," he explained. "However, we wouldn't describe our conviction level as super-high. EBITDA margins should be a positive factor as these can improve vs. FY22, even in a weaker revenue environment."

In addition to lower distribution and freight costs, Zolidis noted that LOVE "should have levers to pull with advertising and marketing at 13% of sales and G&A recently growing faster than revenues."

Ultimately, he believes that the current Wall Street EPS estimates of $2.12 should hold, which makes him optimistic about the company's shares.

"Longer-term, we think there is more growth potential here, and we're inclined to bet on management launching new products and capturing more share, which we do not believe is currently reflected in the stock or expectations," Zolidis added.

Editor's note: The author owns shares of Lovesac.

GettyImages-Stock market Feb 15
A trader is reflected in a market screen on the floor of the New York Stock Exchange (NYSE) on August 25, 2015 in New York City. A lower open is indicated for U. S markets on Feb 15, Friday as Dow Jones futures and other indices are down. Photo by Spencer Platt/Getty Images