November has been a terrible month for Herbalife (NYSE:HLF) shareholders. The company's third-quarter earnings report was, by almost all measures, horrific, and shares have lost more than one-quarter of their value since Nov. 3.

But at these levels, Herbalife could be poised for a turnaround. Below I offer three scenarios in which Herbalife shares would likely rally. It's important to note that, even if all possibilities break Herbalife's way, there's no guarantee the stock will rise -- a general market downturn could always send shares tumbling. Still, Herbalife bulls are likely to welcome all three possibilities.

Herbalife is exonerated by the FTC
Herbalife shares could skyrocket if the many government agencies investigating the company -- most notably the Federal Trade Commission -- find Herbalife innocent of any wrongdoing. For nearly two years, the overarching case against Herbalife has centered around hedge fund manager Bill Ackman's claim that the company is running an illegal pyramid scheme. Ackman has given several lengthy presentations outlining his case against the company, but government regulators have yet to weigh in.

Last month, Fox Business' Charlie Gasparino reported that Herbalife executives had told investors it was "all but certain" that the FTC would not shut the company down. Later, CFO John DeSimone told Bloomberg that the company expected to be exonerated.

If that were to occur, it would remove the largest overhang on the stock -- the possibility, however remote, that Ackman could be right; that Herbalife could be in violation of the law and due for a complete shutdown and asset forfeiture.

Herbalife bears would be proven wrong, and those that sold short the stock (Herbalife's short interest hovers above 30%) betting on a collapse might be forced to cover their positions, creating even more buying pressure.

Herbalife's business turns around
Despite Ackman's accusations, Herbalife's core business has remained quite robust over the last two years -- that is, until recently.

Herbalife's last two quarterly reports fell short of expectations. The third quarter, in particular, was quite a mess, with earnings, revenue, and guidance missing estimates. That miss was partly due to changes Herbalife had made to its business model, changes which may have been prompted by the widespread criticism it has faced.

If Herbalife's business were to turn around -- if volume points began growing again in key regions such as North America, shares could surge to the upside. In addition to regulatory overhang, the recent weakness in Herbalife's results has created a second argument against the company, with some even alleging that it could be forced into bankruptcy if its financials do not improve.

The company believes the changes it has made to its model will result in improvements to its business in the long-term, and has introduced a handful of new initiatives, such as trial packs, designed to reinvigorate its growth. If Herbalife's financials improve in the coming quarters, shares should be expected to rise.

Bill Ackman changes his mind about Herbalife
Finally, Herbalife shares could surge if hedge fund manager Bill Ackman gives up his fight against the company. Ackman has promised to take his campaign against Herbalife "to the End of Earth," making this possibility seemingly the least likely, but any sign of Ackman throwing in the towel could be met with a massive move to the upside.

Ackman has directly sparked many of the sell-offs Herbalife shares have experienced over the last two years, and there's always the possibility that another presentation from the activist hedge fund manager could be lurking around the corner. Even if the FTC were to exonerate Herbalife, Ackman could still pose a threat to the company, as he could lobby for new laws or restrictions that would make Herbalife's business untenable.

Herbalife's investors, including Carl Ichan, have said that Ackman's accusations have created a great opportunity in the stock. That may have been the case, but as long as his fund continues to agitate against the company, it could remain a volatile and potentially dangerous stock to own.

Sam Mattera owns put options on Herbalife. The Motley Fool has the following options: long January 2016 $57 calls on Herbalife. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.