Nu Skin shares hit record highJuly 10, 2013: 12:20 PM ET
Shares of Nu Skin, a maker of anti-aging products and dietary supplements, surged to a record high Wednesday after the company raised its outlook for the year.
Nu Skin (NUS) shares jumped 13% to $75.40 in late-morning trading.
Traders on StockTwits cheered the news, which also gave a boost to rival Herbalife (HLF).
But some traders were quick to point out that Nu Skin has been heavily shorted and that some of the gains were probably driven by investors buying back shares to cover those bets.
The gains came after Nu Skin said late Tuesday that it expects to earn about $1.20 per share on $680 million in revenue for the second quarter. That's up from its previous earnings forecast of between 91 cents per share and 95 cents per share in the quarter.
Nu Skin, which also raised its full-year earnings and revenue targets, will officially release second-quarter result on August 1.
The company sells a variety of skin care and nutritional products that it claims will make people look and feel younger. As a multilevel marketer, Nu Skin operates a direct-sales network of more than one million distributors and "preferred customers" worldwide.
Shares of Herbalife, another multilevel marketing company that sells dietary supplements, were up about 3%. But traders seemed skeptical that the gains would hold.
Critics say multilevel marketers make most of their profits by offering a "business opportunity" to small-time distributors, rather than selling actual products to consumers.
Hedge fund manager Bill Ackman famously called Herbalife a pyramid scheme and placed a $1 billion that bet the company's stock would fall to zero. It's currently trading just above $50 a share.