Herbalife's stock plunges 30%, and Bill Ackman revives his 'pyramid' scheme attack

By Claudia Assis

Ackman says he has a 'psychological short' on Herbalife after closing out his actual short position in 2018

Shares of Herbalife Ltd. fell more than 30% on Thursday, leading activist investor Bill Ackman to revive his feud with the nutritional-supplements company.

Ackman, who lost a yearslong $1 billion bet against Herbalife (HLF), left a long post on X, formerly Twitter, about Herbalife on Thursday, renewing some of his previous accusations that the company was a "pyramid" scheme and saying it was a good day for his "psychological short" on the company.

Herbalife (HLF) late Wednesday posted mixed fourth-quarter results, reporting adjusted profit of 28 cents a share, which was below the FactSet consensus of 40 cents a share, and revenue of $1.21 billion, that was above FactSet expectations of $1.18 billion.

It was Herbalife's fourth straight quarter of "improving sales trends," analyst Jeff Van Sinderen a B Riley Securities said in a note Thursday. Sales fell in North America but rose in international markets, including China.

Herbalife "is a big ship to turn and although progress is being made, [2024] likely will be a transitional year," Van Sinderen said. "That said, ongoing initiatives have potential to enable the company to drive sales growth and margin expansion" next year.

Van Sinderen kept his buy rating on the stock but lowered his price target to $16, from $23, implying 100% upside over Thursday prices.

The analyst's rating is one of two buys on the stock among the seven Herbalife analysts surveyed by FactSet; four of these analysts rate the stock a hold, and one rates it a sell. The shares' average price target, according to FactSet, is $13.60.

The stock is down 62% in the past 12 months, contrasting with gains of around 21% for the S&P 500 index SPX.

The focus for the year is "on top-line growth and margin expansion," Chief Executive Michael Johnson said in a statement.

Herbalife did not immediately return a request for comment about Ackman's tweet.

As for Ackman, the investor has had a busy time on X, most notably railing against former Harvard President Claudine Gay, the university's first Black president, and Harvard's board; and against diversity, equity and inclusion practices, to name a few issues he has addressed.

Don't miss: Who is Bill Ackman, the hedge-fund billionaire who used corporate-raider tactics to push out Harvard's president?

He's also the subject of a New York magazine cover story this week headlined "Raging Bill."

Ackman exited Herbalife in 2018. Last year, he renewed his feud with fellow activist investor Carl Icahn, who took the other side of the Herbalife bet.

-Claudia Assis

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-15-24 1403ET

Copyright (c) 2024 Dow Jones & Company, Inc.