Herbalife is a thriving company that has a robust business model. Over the past few decades, the organization has delivered strong financial returns to investors. Not only does the company have an expanding product line, but the company also has a solid balance sheet. Unlike most other companies, this corporation does not have a ton of corporate debt.
With the rapid growth of the business, the company represents an excellent trading opportunity. Towards the end of December, there were multiple options contracts executed related to the company. The firm has been the target of short sellers in the past. The most famous short seller was Bill Ackman. He famously predicted that the company would have a stock price worth nothing one day. He turned out to be wrong, and he had to sell all of his investment positions.
The organization has had some issues in the past. Multiple executives have left the company due to various problems. At one time, the product quality offered by the company declined. As prices increased, consumers were receiving fewer servings of vitamins.
A new CEO took over the business and decided to make sweeping changes. These changes required a significant financial investment. It took several years before the business was profitable, but the product upgrades helped improve the products offered to consumers.
Another reason that Herbalife has been criticized is that the company offers direct sales opportunities to people who want to make extra money. Some people have called the company a pyramid scheme because of the direct sales tactics used. Direct marketing is a legitimate way to earn additional income each month. Some people who join the program have unrealistic expectations about the monthly income they will receive.
People in impoverished nations do not have a lot of extra opportunities to make money. However, some people have criticized the company for embellishing how much a direct salesperson can earn. The new leadership team at the company decided to keep the direct sales program, but the marketing surrounding the program has drastically changed.
Investing in the Business
This company is an exciting investment opportunity for multiple reasons. The company is one of the most significant supplement manufacturers in the world. With significant buying power, the company pays a small amount for the products sold to customers. The profit margins are so high that the company can afford to spend millions of dollars on advertising each year. The advertising programs have made the company one of the most iconic brand names in the United States. With all of the international expansion, the business is now a global brand.
Investors who purchase stock in the company should be prepared for volatility. In the past year, the stock price of Herbalife nearly doubled. Any disruption in sales could cause the stock price to fall rapidly. Although some people enjoy purchasing options contracts on the stock, options are a risky way to invest in the stock market. Anyone utilizing this strategy needs to spend a lot of time researching various investment options.