Herbalife Ltd. (NYSE: HLF) saw its shares surge 6% on Friday, as the nutritional supplement company's stock appeared to be caught in the midst of a potential short squeeze, driven by improving fundamentals and an attractive valuation.
The stock's rally came on the heels of the company's better-than-expected third-quarter earnings report, which marked the third consecutive quarter of earnings beats. Analysts project Herbalife's earnings to grow by around 20% annually in 2025 and 2026, suggesting that the company's turnaround may be gaining momentum.
One of the key factors fueling the potential short squeeze is the large short interest in Herbalife's stock. With a significant number of shares sold short, any buying pressure from short sellers covering their positions could exacerbate the upward price movement, as the imbalance between supply and demand for shares intensifies.
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