The Bill Ackman of Nu Skin?
Andrew Left, lead editor, researches and short sells companies he believes to be engaged in fraud, have been suspiciously promoted, or have been mistakenly overpriced by the stock market
Citron Research is so convinced that they are looking for a law suit as in their owns words:
If I am lying sue me. I will not hide behind a corporate veil or a mask of anonymity. You know who Citron is.
We would gladly go to the court of law in the United States and prove that your business is running a MLM / pyramid sales operation in China. Citron states that knowing that you will sue in Utah.
The evidence is so clear, that we would look forward to using discovery touncover your illegal operation.
In 7 pages Citron is making this allegations:
Citron Research has now proven through our own independent research and mainstream Chinese media that Nu Skin Enterprises, Inc. is in fact operating an illegal MLM in China. This is not an MLM debate like Herbalife Ltd. – this is a matter of fact.
Nu Skin’s corporate actions
It’s been a year since Citron explored the corporate actions of Nu Skin, 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. 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. ’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. 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. 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.
As first uncovered by Citron last year and now emerging in the mainstream press in China — NuSkin is clearly operating an illegal and dangerous operation in China. Yes Fraud. Mainstream Chinese Press exposes the illegal activities of Nu Skin.
In a in-depth piece of research that has never been pointed out for investors, one of Beijing’s leading newspapers, China’s Beijing Youth Daily published an expose on the ILLEGAL operations of Nu Skin in China. https://finance.chinanews.com/cj/2013/06-07/4906781.shtml In it’s investigation, it concluded in fact that Nu Skin is running an illegal pyramid, and it is not just a few rogue salespeople, as management would like you to believe but rather a thoroughly planned and formulated operation on how to incentivize and deceive its customers.
Most importantly, the Beijing story shows internal documents and conversations with government officials that prove the illegal actions of Nu Skin.
About Citron Research
Citron Research has been publishing columns for over 11 years, making it one of the longest-running online stock commentary websites. With over 150 reports, Citron has amassed a track record identifying fraud and terminal business models second to none among any published source.
The goal of this website is and has always been to provide truthful information in an entertaining format to the investing public. Our goal has never been to engage in “gotcha” journalism. Readers are always encouraged to consider this and all information available regarding any potential investments, to seek professional assistance as necessary, and to draw their own conclusions.
Get more information, facts and figures about Nu Skin, click here for the Nu Skin overview.