QTR Research Provides New 28-Page Bearish Report On Herbalife

QTR Research is the latest firm to weigh in on controversial multi-level marketing nutrition company Herbalife Ltd. HLF. In a lengthy new report, QTR outlined all the reasons why the firm is short Herbalife stock.

QTR believes that the upcoming Herbalife documentary “Betting on Zero” will have a profoundly negative impact on the stock’s share price. The movie, which opens in the United States on March 17, follows Pershing Square Capital manager Bill Ackman’s $1 billion short bet on Herbalife and his drive to expose the company as a pyramid scheme.

“The potential impact of a coming nation-wide documentary has been significantly underestimated and may cause an unprecedented public relations nightmare for the company that it may permanently have trouble recovering from,” QTR wrote.

Is 'Betting On Zero' The Next 'Blackfish'?

The firm compares the potential impact of “Betting on Zero” to the impact that the documentary “Blackfish” had on SeaWorld Entertainment Inc SEAS stock. Since “Blackfish” was released in 2013, SeaWord shares are down 53.0 percent.

QTR also believes one of Herbalife’s largest and highest-profile investors may be looking for a chance to exit the position. The firm points out that Carl Icahn has a history of selling shares once companies institute aggressive buyback programs.

“I believe Mr. Icahn may consider exiting his Herbalife position before the documentary’s March 17, 2017 release or before the FTC’s sanctions on Herbalife’s business model take effect in May 2017,” QTR explained.

In addition, QTR pointed out Herbalife’s China growth appears to be “stalling.”

With all the bearish headwinds for the company in the near future, QTR sees at least 46.3 percent downside for Herbalife by the end of 2017.

Herbalife shares are down 0.6 percent in Wednesday trading.

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