The Big 3 US MLM Companies ‘Hammered’ by Chinese Regulator Concerns 

The Big 3 US MLM Companies ‘Hammered’ by Chinese Regulator Concerns 

The Big 3 US MLM Companies ‘Hammered’ by Chinese Regulator Concerns


Shares of Herbalife Ltd. (NYSE:HLF), Nu Skin Enterprises (NYSE:NUS) and USANA Health Sciences (NYSE:USNA) seeing a deep dive over concerns that Chinese regulators will crack down on the companies’ marketing practices.

Herbalife fell 7.8% to 60.71, marking the biggest decliner in more than 2 months. Nu Skin fell 9.6% to 54.68, and USANA declined 10% to 52.85.

The falls followed a statement by China’s State Administration for Industry & Commerce (SAIC) announcing a 3-month campaign to police pyramid schemes.

Though the state regulator did not name the companies, Herbalife and other MLM (multilevel-marketing businesses) have faced allegations that they use a pyramid sales model.

Herbalife settled a case with the US Federal Trade Commission (FTC) last year that reined in its practices in the US.

As part of the FTC settlement last year, Herbalife agreed to revamp its US operations and pay $200-M to refund distributors. The agency stopped short of calling the company a pyramid scheme.

The agreement with regulators obligated Herbalife to start showing that the majority of its US revenue is generated by consumers.

Herbalife and USANA sell a range of nutritional supplements and other products, while Nu Skin focuses more on beauty items. And all 3 companies see China as Key to their growth, making a potential crackdown especially risky.

Los Angeles based Herbalife would not comment on the statement from Chinese regulators.

HeffX-LTN Analysis for HLF: Overall Short Intermediate Long
Bearish (-0.37) Bearish (-0.43) Bearish (-0.40) Bearish (-0.28)
HeffX-LTN Analysis for NUS: Overall Short Intermediate Long
Neutral (-0.20) Bearish (-0.25) Bearish (-0.33) Neutral (-0.01)
HeffX-LTN Analysis for USNA: Overall Short Intermediate Long
Bearish (-0.41) Very Bearish (-0.51) Bearish (-0.35) Bearish (-0.38)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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