Herbalife has done some serious work to prop up its stock price over the past year. But a reckoning could be on the way and the signs of danger are becoming crystal clear.

Herbalife is finished with the battle with the FTC, the battle between Ackman and Icahn, and the tender offer that looked like a ‘go private’ opportunity for a minute. All of those headlines provided momentum for the stock and kept it devoid of any connection to the company’s actual financial performance. All of the above noise is over and it is back to basics in evaluating the firm – and the outlook is grim.

Listen to one analysts thoughts on the Grand Canyon size hole in Herbalife’s balance sheet:

Why now? With the tender offer completed, there does not look to be much capital left to continue the high level of share buybacks without levering up further. I do not believe a company that fails to meet its cost of capital can remain overvalued indefinitely. The Company has provided a poor economic forecast (FY 2018 owner earnings). Herbalife has major flaws in its business strategy – the model does not fit the product nor do the high level of sales and administration. A regulatory risk may be removed, but the poor financial metrics, balance sheet, and strategy flaws should become the focus instead of the pyramid scheme practices the company was accused of. With the regulatory issues (potentially) behind Herbalife and the tender offer completed, now it is time for investors focus on the numbers and see if its strategy and new practices can deliver.

Herbalife still faces reputational risk to its stock price and that has to be taken into account when evaluating the possible performance of the stock and the company at large.

What we can’t figure out is what in the world are they going to do with the extra $833 million in debt they’ve added in 2017, while only having $335 million in cash on hand? That is a $0.5 billion hole to fill. How are they going to fill it? The same analyst had a theory:

 “Herbalife has a smart and significant shareholder in Carl Icahn. Icahn’s holdings are now approximately 31%, obviously significant. This is not a new idea. Bill Ackman (head of Pershing Square) began his crusade years ago at the Sohn conference. He has delivered multiple PowerPoint presentations with hundreds of slides. He bankrolled a movie that is either a documentary and investigatory journalism or a “gotcha” piece that isn’t altruistic but one more PR tactic to defame the Company. The business strategy and MLM practices have been criticized for years, and per the recent settlement with the FTC, Herbalife’s practices are being changed. As we learned from David Einhorn’s long battle with Allied Capital, this type of short selling investment can take a long time to be recognized by accountants, regulators, and investors, if ever. It is unsure that there will be any further scrutiny and reform including possible penalties. This was a major catalyst Bill Ackman pointed to in his analysis and short position. Per Morningstar, the number of investors (shares) who are short the stock has decreased significantly.