Nu Skin Enterprises, Inc. (NYSE:NUS) received a jump-start today from a report out of China. Just days ago, another report from China sent the company’s stock diving as Chinese officials launched an investigation into the company on allegations that it is a pyramid scheme. However, it seems that at least for now, Chinese authorities are giving Nu Skin the go-ahead to keep doing business.
Chinese regulator approves Nu Skin Expo
A report on Yahoo! Finance indicates that some are speculating that China’s Ministry of Commerce is allowing Nu Skin Enterprises, Inc. (NYSE:NUS) to hold its 2014 Expo in Shanghai. Shares rose as much as 6% after those murmurings started to surface. However, the stock still has a long way to go to recover its previous trading level of around $135 per share.
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Nu Skin stops recruiting Chinese distributors
Nu Skin Enterprises, Inc. (NYSE:NUS) has been rocked by news from China for more than a week. First Chinese media published a report about their own investigation into the company, alleging that it is a pyramid scheme. That report drew the attention of Chinese regulators, who launched their own investigation into the company. Nu Skin then started reviewing its own practices in China and suspended distributor recruitment there.
The company’s CEO continues to deny that it is a pyramid scheme. Also management said they would keep selling Nu Skin products in China even as the investigation drags on.
Herbalife dragged into Nu Skin issues
Herbalife Ltd (NYSE:HLF), which bears some resemblances with Nu Skin Enterprises, Inc. (NYSE:NUS), has had its shares affected by news about Nu Skin. Both companies use a multi-level marketing business model and are banking on China holding major growth for them over the next year or two. As a result, when shares of Nu Skin fell because of the Chinese investigation, Herbalife also declined, although to a lesser extent. We may be seeing something similar happen today as Herbalife shares rose as much as 4% after the news about Nu Skin’s expo.