This company can't turn back the hands of time.
The body slam of World Acceptance's shares, after it disclosed it's being investigated by the Consumer Financial Protection Bureau, shows how some stocks are elevated from here to kingdom come on air and (at the first sign of trouble) weak-kneed investors. World, which I originally red flagged in 2012, has been an expert at keeping itself inflated on buybacks. That points to an inherent flaw in buybacks: The prospect that shares will fall below the buyback price. That's especially true at companies like World, which are walking a thin line in a world of controversy and use buybacks to keep their shares from falling.
A hard reset of the business models of multi-level marketers is possible. So much for those who laughingly insisted the FTC would never launch an investigation into Herbalife. An investigation is underway. It won't be over anytime soon and the outcome is uncertain. But in the meantime, what to expect? Beyond the broad and deep request for documents, which is likely to be part of a civil investigation by the FTC, the bigger issue is what the ramifications are for Herbalife and the entire industry, regardless of whether the investigation from Herbalife's perspective is a win, lose or draw. In two years of researching the industry, I've been struck by how multi-level marketers, as a whole, have slipped through regulatory cracks....
A hard reset of the business models of multi-level marketers is possible.
Let's start with the obvious disclosure: I love Twitter. As I've written numerous times, it has become my primary news feed and I use it for disclosure and conversation. But as the company appears to struggle with user engagement, especially with its stock in the nosebleed section of valuation, several things are clear. I believe the company needs to do a better job marketing to users who don't realize they never need to tweet. But there's something else for those who do want to tweet: Outside of merely posting a simple tweet, Twitter is not user-friendly. I started thinking about this after watching CNBC's Carl Quintanilla's interview Tuesday with Twitter co-founder Biz Stone. Stone, who doesn't work at Twitter any longer, said he believes there is 'plenty of room' for improvement. (Easy for him to say!)
What you may have missed, including takes on Nu Skin, Clean Harbors and pharmaceutical mega mergers. It was a light week as I am working on new stories, but here is a roundup from last week's Reality Check. Plus, as an added bonus, there is a new red flag. Keep an Eye on Nu Skin - The next date that counts will be March 18, which is the deadline for the company to file its delayed 10-K. As I wrote on here last week, the company disclosed that its audit committee had hired "outside counsel" to help with an internal review of Nu Skin's China operations. But why would the audit committee be involved in a review of the company's China operation -- whose operations are being probed by the Chinese government? And why would the audit committee hire outside counsel?
I am adding the company to my Watch List with a yellow flag.
What you may have missed, including takes on Nu Skin, Clean Harbors and pharmaceutical mega mergers.
Despite the move, this is still the same company that has stumbled quarter after quarter.
Suddenly there's talk of an audit committee.