"Pyramid Schemes or Profitable Investments? Analyzing the Stocks of Multi-Level Marketing Companies"
Date of Award
Spring 2022
Degree Name
Bachelor of Science (BS)
Advisor(s)
Kevin Mirabile
Abstract
Multi-level marketing (MLM) companies, also known as network marketing companies, represent a controversial yet financially significant sector within the direct sales industry. Despite being associated with dubious profit structures where a majority of participants either lose money or earn minimal profits, MLMs legally operate on a model that relies heavily on recruitment rather than traditional product sales. This structure has drawn scrutiny and repeated investigations by the Federal Trade Commission (FTC), highlighting that most involved in MLMs make little to no money. Despite these challenges, MLMs are a $35 billion industry, with companies like Herbalife demonstrating significant market valuations. This study aims to bridge a gap in the existing literature by providing the first comprehensive analysis of public MLM companies as an investment group, assessing their profitability and market performance relative to traditional businesses. This research seeks to enhance understanding of MLMs' viability and ethical considerations within the broader economic and regulatory landscape, potentially informing future regulatory and investment decisions.
Recommended Citation
Delahunt, Katy, ""Pyramid Schemes or Profitable Investments? Analyzing the Stocks of Multi-Level Marketing Companies"" (2022). Gabelli School of Business Honors Thesis Collection. 33.
https://research.library.fordham.edu/gabelli_thesis/33
