How many times in one day can trading on a single stock be halted? Maybe Nu Skin Enterprises, Inc. (NYSE:NUS) will answer that question. Shares have been getting killed over these last two trading sessions after Chinese newspaper the People’s Daily accused it of brainwashing people and being a pyramid scheme.
Today trading was halted on it for several minutes pending the announcement of news. Then trading began again, and shares fell 38%. That tripped a second halt of the shares. Then trading started again…only to be halted a third time. And the cycle repeated itself for yet a fourth time, according to Business Insider.
So what’s Nu Skin’s news?
Nu Skin Enterprises, Inc. (NYSE:NUS) issued a statement saying it is conducting its own internal investigation into its own business practices in China. The multi-level marketing company said it will go through its business province by province to see if any of the allegations made by the People’s Daily are true. Earlier today, Chinese officials said they were officially launching an investigation into Nu Skin.
Nu Skin said they are inviting Chinese regulators “to provide guidance” in their investigation and business model. In addition, the company also said they’re working to reinforce their “training and education efforts.”
Nu Skin declines 35%
At this point, shares of Nu Skin were down 35%. Two of its competitors—Herbalife Ltd (NYSE:HLF) and USANA Health Sciences, Inc. (NYSE:USNA)—also fell today in trading as investors worry that the Chinese government may investigate them as well because they are also MLMs. Shares of Herbalife fell as much as 11%, while USANA shares fell nearly 12%.
Today Citron Research, which back in October claimed that Nu Skin Enterprises, Inc. (NYSE:NUS) was running a pyramid scheme in China, tweeted that it has no evidence that Herbalife is also operating a pyramid in China. The firm also noted that not all MLM companies are the same.
Clearly not everyone is convinced that Nu Skin is a pyramid scheme, however. Deutsche Bank issued a report telling investors to disregard the noise about the company, saying that its balance sheet is impressive.