On Tuesday, the multi-level nutrition supplement seller announced that it struck a deal with Bank of America Merrill Lynch to buy back $266 million worth of Herbalife stock by the end of the quarter. Last week, the company ended its dividend, saying it would use that money to buy back stock instead.
This is all happening amid published reports that various regulatory bodies are looking not only at Herbalife's business practices but also at some of the hedge fund managers that are either long or short Herbalife's shares.
Pershing Square's Bill Ackman bet $1 billion in 2012 that Herbalife's shares would fall and has accused the company of being a pyramid scheme. Given the amount of scrutiny on both sides of this battle, Gina Sanchez, founder of Chantico Global, warns against investing in the stock.
(Read: The real Ackman and Icahn—scary)
"Anybody who's considering investing right now," said Gina Sanchez, a CNBC contributor, "has to be aware that there's a terrible risk out there that this could be a pyramid scam and that this would be a terrible investment under that circumstance."
Herbalife's recent earnings quarterly numbers and revenue projections were better than analysts had expected, but that gives Sanchez reason for pause, especially when compared with more established rival Weight Watchers.
Herbalife "gave great guidance for 2014 while Weight Watchers meanwhile was showing a reduction in sales, a reduction in revenues, [and] a reduction in paid-in weeks," Sanchez said. "It's hard to add those two things up."
However, Steven Pytlar, chief equity strategist at Prime Executions, believes the charts are more positive.
"It's been a big battle between big buyers and big sellers," Pytlar said. "The battleground in this stock has really been defined in the charts at this $60 level, which is basically exactly where it's sitting today."
Though Herbalife shares occasionally tested the $60 level, it spent the second half of last year and early this year above the $60 mark. In March, though, it broke below that level but Pytlar says buyers are looking to push the stock above that point.
"The charts actually lean bullishly in that buyers are outpacing sellers looking to accumulate more stock," Pytlar said. "Their side has the upper hand right now. And, moving through that $60 level could be a big signal that sellers are maybe getting exhausted [and] don't believe in their side of the story as much anymore. You can see buyers really trying to push it higher from there."
One possible catalyst for a rise in the stock is a potential short squeeze thanks in part to the deal with Bank of America Merrill Lynch. With short interest representing about 36 percent of Herbalife's stock's total float, some investors may be tempted to buy the company's shares. Sanchez thinks such investors know what they're in for.
"The long-term story on this is still too risky," Sanchez said. "If you're trying to play that kind of a pop, you better be ready to get in and get out."
To see the full discussion on Herbalife, with Sanchez on the fundamentals and Pytlar on the technicals, watch the above video.