Shares Of Nu Skin And Herbalife Are On A Major Tear

Shares of NuSkin are going nuts today following a more than $US500,000 fine from a Chinese regulator.

The stock was last trading up more than 26% at about $US94 a share.

Back in January, NuSkin’s stock plummeted after China’s State Administration for Industry & Commerce (SAIC) said it would investigate following a report in “The People’s Daily” in China that criticised NuSkin’s marketing practices and alleged that it’s a pyramid scheme.

NuSkin is a multi-level marketing company that sells anti-ageing products. Chinese direct selling laws are very strict.

Today, China’s SAIC fined the company $US540,000 for misleading consumers and illegal sales, Reuters reported.

Meanwhile, Herbalife, another multi-level marketing company that sells weight loss products, is trading higher this morning. The stock was last trading up more than 6%.

Hedge fund manager Bill Ackman, who is famous for his Herbalife short, has accused the company of violating Chinese direct-selling laws. He believes the company operates as a “pyramid scheme.”

Earlier this month, it was revealed that Herbalife is being investigated by the Federal Trade Commission. Since then, Herbalife’s stock has declined.

Here’s Nu Skin’s chart since the beginning of the year:

Here’s Herbalife’s chart for the past five trading sessions:

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