Herbalife's Funny Numbers - Avoid this Stock! Avoid it Altogether!

Pyramid scheme or not, Herbalife is tanking


So far this year, Herbalife's shares are down about 43% -- including a roughly 20% drop Tuesday (as of this writing) after the company shocked investors with a bad quarterly report and a pessimistic view of the future Monday.
Where does Herbalife find 1.9 million new distributors a year? 80% of the company’s “net sales” are generated outside of the United States, so it’s safe to assume that the bulk of the recruiting is going on overseas as well


Second, I can tell you that consumers are largely ignorant of the truth behind multi-level marketing. I have been researching and educating consumers on MLM for more than 8 years, most notably on my anti-Mary Kay Cosmetics site Pink Truth. I continue to be astounded by the number of intelligent, otherwise savvy consumers who can be drawn in by MLMs. These scams have perfected “overcoming objections” and convincing people to sign up and part with hundreds or thousands of dollars. And multi-level marketing companies try their best to shut up any dissenters or truth-tellers. While Herbalife as a whole has not collapsed over the last 30 years, individual markets have. And this demonstrates the precarious nature of pyramid schemes. They collapse from within before the company as a whole collapses.
Comments: Direct link to extensive PPT presentation. Image source. Stock quote.

1 comment:

  1. And their product is essentially the same thing that you can buy at Wal-Mart for a couple bucks a pound--protein powder with flavoring.

    Really it is impressive how many fly-by-night outfits are more or less repackaging soy and whey protein and claiming it's the next great thing for health. Yikes.

    Or is that "depressive"? As the "sonofadietician", I'm leaning towards the latter.


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