Are the attacks on Nu Skin (NUS) Warranted??

Of course it is all over the news that Nu Skin is being called a pyramid scheme in China. This news caused NUS stock to plummet and took other network marketing companies down with it.

Nu Skin was charged here in the USA back in the 1990s as being a pyramid scheme. After a lengthly investigation, charges were dropped and the FTC could find no wrong doing with Nu Skin or anything wrong with their business model. So why is China challenging this and why is the market acting so bearish?

 

The market is acting bearish because much of NUS's value is tied to how well it
continues to expand in China over the near term. According to a Reuters article today, "the company's sales in Greater China more than tripled to $464.6 million in its quarter ended September 30. The region accounted for about half of total sales."

 

I am aware of Nu Skin's growth and personally feel that NUS is a buy and was undervalued even at when it was trading ! $130. My question is does anyone really feel that the accusations of Nu Skin being a pyramid scheme is warranted. I think not.

 

I knew a woman in Japan who sold Nu Skin's products. She told me about the seminars Nu Skin regularly holds for its salespeople
, who are told that the company has the biggest and fastest computer in the world of which there are only three. And they are now using that computer to design their own space station that they will put into orbit shortly where they will make new products that will change the world! Also, how all of Nu Skin's profits are given to charity etc, etc, etc. She's a believer, and I guess that's how they keep it going.

 

Interesting.

 

"I think not"

what knowledge do you have which suggests the co. is not a pyramid
scheme?

 

I see this as an incredible buying opportunity on NUS. Network Marketing companies aka MLM are grossly misunderstood by people so when a allegation such as, "China accuses Nu Skin of running a pyramid scheme." Come around, the market shakes. Savvy investors know better.

Herbalife faced a similar charge in Belgium. The higher courts over ruled the original complaint and found Herbalife guilty of no wrong doing and liked their business model.

Expect China to do the same with Nu Skin. For now, expect volatility and also expect a dead cat bounce very soon.

 

NUS offers apologies

http://www.sec.gov/Archives/edgar/data/1021561/000102156114000004/ex99-1.htm

 

Note that it was 2 years from the original Belgian court decision until the higher court overruled it. How long do you expect it will take in China?