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What: Shares of USANA Health Sciences (NYSE:USNA) were getting banged up today, falling 10% after peer Nu Skin Enterprises (NYSE:NUS) plummeted 26% on an investigation into its practices by the Chinese government.
So what: The fellow multi-level marketing company took a hit on a pure tandem play here. Nu Skin shares have fallen nearly 40% in two days. First, the government's official newspaper said the company was "a suspected illegal pyramid scheme," and today, it announced an investigation into Nu Skin potentially distributing false information. The merit of the claims is questionable, as Nu Skin has been doing business in China for 11 years and already has "direct selling licenses." Nonetheless, the investigation is a major threat.
Now what: While Nu Skin derives half of its revenue from China, USANA sees nearly 60% of its revenue come from the world's No. 2 economy. Still, USANA hasn't experienced the skyrocketing growth in China that Nu Skin has lately, meaning that it is less likely to catch the ire of the ruling party. I don't see any meaningful long-term concerns for investors here.
Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.