Herbalife (HLF), Nu Skin Enterprises (NUS), and Usana Health Sciences (USNA) are tanking on China's 'multi-level marketing' crackdown. Herbalife shares slid more than 5% on Monday and Nu Skin and Usana declined more than 7% apiece.
Bill Ackman Photo by Matthew Eisman/Getty Images for Hamptons International Film Festival
China's State Administration for Industry & Commerce or the SAIC issued a statement that said it plans to bone up their investigations on multi-level marketing organizations, strengthen its focus on recruitment platforms, and educate the public on MLM organizations. Herbalife, Nu Skin, and Usana, which generates a sizable portion of sales from China/Asia region, felt the hurt as didCarl Icahn's Icahn Associates Holding, which owns 24.5% of Herbalife's shares outstanding, according to FactSet.
If Herbalife's stock bites the dust, Bill Ackman will surely dance on its grave. Assuming Pershing Square Capital Management is still short the stock, founder and CEO Ackman must be feeling validation for his years-long crusade against the company. At the annual Sohn Investment Conference this year, the hedge fund manager argued that the company's fundamentals were "deteriorating." Now its stock price is too.