“If history is any indication of what the future may hold, it’s safe to say it will do whatever it takes to cobble together what little confidence the market still has through aggressive stock price management schemes. I believe if the company does not continue to participate in the market as a meaningful buyer of its own stock, the stock price will plummet to a more natural, unassisted level, thus making the probability of the aforementioned asymmetric depletion of cash highly likely. This all would likely result in credit downgrades.”
Uhhh…yikes. Again, this paints a relatively clear picture that Herbalife is simply masquerading as a colorful store front doing nothing more than managing its stock price, rather than selling products.
Sure, this particular theory has been parsed and unpacked by hedge fund titans and the FTC (thus the fines and new guidelines), but it doesn’t look like the pressure isn’t going away. If anything, the pressure could ramp up all over again.
If you are a meaningful Herbalife shareholder, or even a distributor of its products, you certainly won’t have a lack of ‘news’ to discuss over the coming 12 to 18 months. Stay tuned.