Evidence from the public markets continues to validate the data and trends investment banking and business development firm Transformation Capital has been reporting of late.
Direct selling continues to stand out as an ideal model in the current pandemic environment. Month-to-date, the four large direct selling stocks have increased in value from 11 percent (low) to 19 percent (high), as of yesterday’s market close, as compared to a 4.1 percent increase in the Dow Jones Industrial Average. Collectively, these stocks have risen 14.5 percent month-to-date and an impressive 64 percent since the beginning of March.
Following the markets close on July 1, 2020 Nu Skin (NYSE: NUS) reported preliminary second quarter revenue results in range of $603 to $608 million, which was well ahead of its internal guidance range of between $520 and $550 million for the period. The following day the stock surged 25 percent on more than 4X average trading volume.
The remaining three large public direct selling companies traded higher on the day as well, despite a relatively flat to slightly up performance from the major indices:
- Herbalife (NYSE: HLF) +3.9%,
- USANA (NYSE: USNA) +11%
- Medifast (NYSE: MED) +5.8%
Nu Skin is expected to report its full Q2 results after the market close on August 5, when the company will likely significantly increase its previously provided annual revenue guidance of a range between $2.17 to $2.26 billion.
Before the market opened on Monday, July 13, Herbalife announced a modified Dutch auction tender offer to repurchase up to $750 million of the company’s shares at a price of not more than $50, and not less than $44.75, per share. At the same time, the company announced the largest volume points(1) quarter in the company’s history. Following these announcements, Herbalife’s stock moved aggressively higher, on more than 6X average trading volume, and closed the day 13 percent higher.
USANA is scheduled to report its second quarter financial results after the market closes on Monday, July 21.
1Volume points are a key internal metric utilized by Herbalife management, which are a weighted-average measure of product sales volume. Volume Points are unaffected by exchange rates or price changes and are used by management as a proxy for sales trends.
