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This Is Why Shares of Herbalife Are Rallying Today

An Herbalife logo is shown on a poster at a clinic in the Mission District in San FranciscoAn Herbalife logo is shown on a poster at a clinic in the Mission District in San Francisco
An Herbalife logo is shown on a poster at a clinic in San Francisco, California on April 29, 2013. Photograph by Robert Galbraith — Reuters

Shares of Herbalife, maker of nutritional supplement and weight loss goods, jumped 25% in early trading Friday after the company revealed it could be finally near the end of a Federal Trade Commission probe.

Herbalife (HLF) was accused of operating a pyramid scheme by hedge fund giant Bill Ackman, head of Pershing Square Holdings, and was then subjected to an FTC probe launched in March 2014. Up to Thursday’s close, the stock had dropped 25% since the probe began.

Ackman, who has suffered heavy losses both this year and in 2015, has a short position in Herbalife.

But now company is in talks with the FTC “regarding a potential resolution to the matter,” Fortune’s Roger Parloff reported Thursday. Herbalife made it clear that the talks could end anywhere, with the FTC filing a civil complaint, a settlement, or even with the company being cleared of the allegations.

Part of the stock’s current rally can also be attributed to Herbalife’s earnings report Thursday. The Los Angeles-based company reported fourth-quarter revenue of $1.1 billion, compared with analysts’ expectations of $1.06 billion. Earnings clocked in at 98 cents per share, beating the forecast of 94 cents.

Herbalife did lower its guidance for 2016, citing currency headwinds. The company expects revenue to decrease 3% to 6% in the first quarter, with earnings per share in the range of $1.24 to $1.34.

Shares of Herbalife are now trading at their highest since October, and have gained 6.8% since Dec. 31.