Bill Ackman, who must seem like Darth Vader to Herbalife’s management, has pronounced a death sentence on the company. This is part of his ongoing campaign to completely annihilate the company because he sees it as fraudulent and unethical. Ackman claims Herbalife’s business model is not legitimate and its main aim is to trick gullible people that they will be salespeople, while many of the purchases are made by those who sell the product.
Herbalife management has threatened to prosecute Ackman for stock manipulation. In response, Ackman says Herbalife collapse, and its stock value will be down to zero within a year, as reported by Reuters. At a Chicago church gathering, Ackman said, “It is an embarrassment to the country that this company exists.” Herbalife management says Ackman is less concerned about ethics than in making a huge profit from his short position. Carl Icahn begs to differ with Ackman. He has a stake in the company and thinks it has a “good business model.”
Herbalife dropped 52% in 2014, which is good news for Ackman, but adds fuel to the fire of Herbalife’s claim that Ackman’s accusations are hurting the business. Ackman said, “I’d be surprised if it isn’t gone within a year.” According to projections, Ackman could make $1 billion if Herbalife is destroyed.
However, to show that he is concerned about the public good and is not just some sadist hellbent on destroying a company to line his own pocket, Ackman pledged $10 million to TheDream US, a charity that provides scholarships to immigrant students.
Wait a minute. That’s $10 million and not $1 billion. Oh well, so much for numbers.