NEW YORK (TheStreet) - Herbalife (HLF), on Monday evening, reported disappointing second quarter earnings that were below Wall Street consensus. The multi-level supplements seller also lowered its revenue guidance for the third quarter and full-year, causing shares to tumble over 10%.
Los Angeles-based Herbalife has been waging a multi-year battle against hedge fund billionaire William Ackman of Pershing Square Capital Management, who bet $1 billion against the company's shares and called it a pyramid scheme. Herbalife has strongly denied Ackman's claims and spent tens of millions of dollars on advisors and public relations campaigns to rebut the hedge funder's assertions.
Last Tuesday, Ackman caused quite the roller-coaster in Herbalife shares when he took to CNBC and Bloomberg to pitch a three-hour presentation that would show the company to be a fraud. On Wednesday, his presentation disclosed new information on the way Herbalife's network of Nutrition Clubs work. He alleged that most of Herbalife's apparent Nutrition Club customers are actually part of the company's recruitment chain. Herbalife, however, stood by its business and said Ackman had over-promised and under-delivered with his presentation.
Must Read: Ackman and Herbalife -- The Day After
While Ackman's presentation was revealing, it did not contain the smoking gun he'd promised. Herbalife shares surged 26%, their most on record. Shares are now giving back gains in the wake of Herbalife's disappointing earnings and guidance. Those who remain believers in Herbalife are likely going to tune into the company's earnings call to get a better understanding of why earnings fell short and guidance is falling.