Clearly, the company reaching its long-awaited resolution with the FTC cheered investors.
Though worries over possible regulations in markets like China continue to hang over the company, investors are satisfied that the FTC issue is behind Herbalife. The regulator told the company to restructure its controversial multilevel marketing operations. The stock could carry on surging upwards, affording you both growth and protection in a risky market.
On July 15, consumer protection watch-dog FTC mentioned that Herbalife International of America, Inc., Herbalife International, Inc., and Herbalife, Ltd. have decided to fully restructure their U.S. business operations and pay $200 million to pay off consumers thereby settling Federal Trade Commission charges.
What were these FTC charges?
The FTC specifically talked about these companies deceiving consumers into believing they could earn substantial money selling diet, nutritional supplements, and personal care products. This was the trigger that sent HLF shares into a tailspin.
When Herbalife disclosed second-quarter earnings on Aug. 3, the scorecard impressed investors as the company's earnings-per-share (EPS) and revenue beat estimates.