What do I disagree with in the Solaris report? Where to begin? Solaris claims that “Direct Selling Segment Entering a Fast Growth Era”, which is an utterly worthless statement. YGYI is a MLM company; not a direct sales company, so making any comparisons with trends (even if they were described accurately) in direct selling is pointless and misleading. In fact, the report doesn’t even mention the word multi-level marketing, which is blatantly deceptive. That omission is explainable by the fact that MLM has a horrid reputation and is a frequent target of regulatory agencies and class action lawsuits. Failure to divulge this risk factor is dishonest to say the least.
The report lauds YGYI’s product portfolio for its diversity, when in reality, the product portfolio is a scattershot collection of various inferior brands of junk that no one has ever heard of; cobbled together from YGYIs acquisition of various smaller MLM, which was done simply to acquire their distributor networks. Which brings us to another point about the instability of YGYI – distributor networks are not fixed assets and retention rates are traditionally terrible. It’s a safe prediction that in a year, YGYI will lose more than 50% of its distributors.
The report pumps up Joel Wallach as though he’s some kind of venerated scientist when nothing could be farther from the truth. He’s a quack naturopath, utterly lacking in credibility, who spends all his time traveling to Podunk towns doing the dog and pony show for YGYI (i.e., pitch meetings). He frequently pitches the products as miracle cures, in violation of the law, and is a net liability to shareholders.
The report anticipates international growth but fails to acknowledge that the key new market that YGYI allegedly penetrated (Russia) is going through economic collapse and isn’t expected to recover for another 3 years at least.
The report briefly mentions the competitive landscape but fails to provide details as to how YGYI is expected to capture market share from these other companies.
The peer group comparison calculations used to value the company were ridiculous and completely unreliable.
Let’s add to that the fact that Solaris has no track record or credibility (they won’t even have a functioning website until March); that YGYI paid them $7,000; that the PE ratio is an astonishing 80 (ridiculous for a company in this sector) and the EPS is under a penny; and that twice now YGYI has commissioned similarly rinky-dink analytics firms (Taglich and SeeThru Equity) to issue reports with wildly optimistic PPS predictions that didn’t come close to panning out.
