Shares of NuSkin dropped dramatically after officials in China confirmed they would investigate accusations that the company is operating an illegal pyramid scheme. Nu Skin, which makes skin-care and nutritional products, acknowledged that there likely would be a negative impact on its China revenue but that it was is too early to know whether its previous forecast would be affected.
“If the situation proves to be true, the commerce agency will deal with it according to the law and regulations,” China’s State Administration of Industry and Commerce said.
Nu Skin’s shares were down as much as 39% on the New York Stock Exchange shortly after the company released its statement. The stock closed down $30.43, or 26%, at $84.80. and fell another 10% to $76.77 at midday on Friday.
NuSkin announced that it would cooperate with Chinese regulators to address any concerns it had with its business practices in China.
“Given the substantial growth in our China sales force over the last year, we are also taking additional steps to reinforce our training and education efforts,” Nu Skin said.