Herbalife said it's talking to the FTC and now the stock is exploding higher
Shares of Herbalife were soaring on Friday after the company suggested it could be close to a resolution of its probe with the Federal Trade Commission.
The FTC launched a probe into the health supplements company after hedge fund billionaire Bill Ackman took out a $1 billion short position and claimed the company was akin to a pyramid scheme that preying on poor people.
Herbalife has denied these accusations, leading to a prolonged legal and public opinion battle.
According to an annual report filed to the SEC on Thursday, the outcome of the probe is unknown, however, the company said it is in discussions with the FTC.
In its filing, Herbalife said:
"The possible range of outcomes include the filing by the FTC of a contested civil complaint, further discussions leading to a settlement which could include a monetary payment and other relief or the closure of these matters without action. The Company is cooperating with the investigation and at this time it is difficult to predict the timing, and the likely outcome, of these matters."
Herbalife did not have an estimate of the monetary value of penalties they could incur, if any.
But the market is clearly taking it as a sign that a worst-case scenario for Herbalife - read: being shut down for operating a pyramid scheme - will not come to pass.
Following the news, the stock jumped as much as 25% Friday.
Near 10:20 a.m. ET, shares were up 21%.
