Downtown L.A.’s Herbalife Ltd. was busy last week.

The company, still trying to shore up its reputation in light of the federal government’s investigation into the company as a potential pyramid scheme, announced midweek that it had overstated its worldwide growth last year.

However, the producer and seller of supplements and weight-loss products posted its biggest ever same-day stock gain the week before after announcing that it is in talks with the Federal Trade Commission regarding a potential resolution to an investigation into its marketing practices.

The investigation was prompted three years ago by allegations from billionaire hedge fund manager William Ackman that Herbalife operates illegally.

Ackman’s New York-based Pershing Square Capital Management started shorting the company’s stock in May 2012, betting that Herbalife shares would plummet. Ackman has placed a $1 billion bet against the supplement maker.

Herbalife’s Feb. 26 announcement that it was talking with the FTC prompted optimism that it could overcome the dispute without incurring much further damage. Its shares rose as much as 27 percent to $58.20 after the filing was released, marking the biggest intraday increase since the shares began trading in 2004.

“There can’t be a resolution without a negotiation, so this news clearly reflects progress,” said Meredith Adler, an analyst at Barclays Capital Inc. in New York, who pointed out that Herbalife’s sales volume had been improving in recent weeks as well.

But those positive developments were tempered last week when Herbalife disclosed it misstated the firm’s active new member growth late last year during a call with analysts and shareholders. The company said the discrepancy arose as the result of a metric it created in August to defend itself against Ackman’s accusations that it is a Ponzi scheme. Herbalife blamed database scripting errors for the mistake.

Herbalife’s corrected figures for last year say active new members worldwide grew by 3.4 percent for the year instead of 8.3 percent. Its revised figures for the fourth quarter are even more divergent. During that period, active new members grew by only 3.2 percent rather than an originally reported 16.7 percent.

Herbalife stock closed at $52.42 on Thursday after the news was announced, a drop of 7 percent from the previous day.

Adler said that although these mistakes were made, Herbalife is still a growing company and she expects its cooperation with the FTC will put the company back on track. Her firm has maintained its price target of $73 and given it an “overweight” rating.

“At the moment, we see progress with the FTC situation (such as) negotiating a settlement and removing the risk that the regulator would shut down (Herbalife’s) U.S. operation,” she said.

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