Citron Research on Nu Skin

Citron Research has now proven through our own independent research and mainstream Chinese media that Nu Skin Enterprises, Inc. (NYSE:NUS) is in fact operating an illegal MLM in China.  This is not an MLM debate like Herbalife Ltd. (NYSE:HLF) – this is a matter of fact.

Nu Skin NUS logo

If Nu Skin Enterprises, Inc. (NYSE:NUS) were to have just the same multiple as Herbalife Ltd. (NYSE:HLF) the stock is worth $67, if you eliminate China the stock would be under $30.  Read the report for the dirty details.

Nu Skin’s corporate actions

It’s been a year since Citron explored the corporate actions of Nu Skin (NYSE:NUS), the Utah-based MLM Company most dependent on revenues and growth from Mainland China, while operating an illegal pyramid scheme.

In the intervening year, Bill Ackman focused attention on the legal jeopardies of the MLM model with regard to FTC regulation within the United States with his critique on Herbalife and introduced a debate on the legality of MLM. As tweeted in the past, Citron was long Herbalife Ltd. (NYSE:HLF) and most importantly readers must understand that not all MLM are created equal – Ackman just bet on the wrong horse.

A year ago, while on a CNBC debate, Deutsche Bank analyst Bill Schmitz defended Nu Skin, claiming that even if China might have some issues that made all of China disappear from Nu Skin Enterprises, Inc. (NYSE:NUS)’s financials, it accounted for only 10% of Nu Skin’s business.

Things have changed for Nu Skin

Citron observes that Nu Skin Enterprises, Inc. (NYSE:NUS) has become extraordinarily dependent on China for a disproportionate amount of its gross revenues, and all of its growth. With its Mainland China sales now accounting for an extraordinary 28.9% of its total revenues, investors face a tremendous amount of risk from Nu Skin’s business model. Can this revenue concentration and these growth rates be even remotely sustainable?


Specifically, Nu Skin Enterprises, Inc. (NYSE:NUS) has been on a tear in mainland China, with revenues soaring from 57.2 million in Q2 2012 to 197.6 million in Q2 2013 – an astounding increase of 244.9% year over year.


Nu Skin operation in China