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PricewaterhouseCoopers Expands Audit of NQ Mobile

  +Follow July 3, 2014 10:53AM
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PricewaterhouseCoopers, NQ mobile stock, NetQin mobile stock, china stocks, fraud, audit

Shares of NQ Mobile (NQ) fell nearly 30 percent in the shortened pre-holiday July 3 trading day after PricewaterhouseCoopers announced they were expanding their fraud investigation into alleged securities fraud on the part of the Chinese software company.

Of particular interest to shareholders of the company were hints that NQ is not cooperating with external investigators. In the midst of the investigation NQ both suddenly replaced the chair of the audit committee and reportedly stalled on requests from PricewaterhouseCoopers for more detailed information on their financials.

And still, NQ has failed to provide its 2013 fiscal year financial report. All this adds up to increased ammunition for NQ’s army of cynics, who have called this company an outright fraud since last fall.

Short Getting Deeper

The major accusation against NQ originate from famed short seller Muddy Waters, who have long stood by accusations that the company is almost certainly a house of cards built on fabricated user numbers and greatly exaggerated revenues.

A subsequent audit commissioned by NQ found no discrepancies that indicated fraud, sending shares into recovery mode. A major deal with Sprint (S) to incorporate NQ software into Sprint phones galvanized the company’s supporters, and gave credence to counter-accusations that Muddy Water’s campaign against NQ was simply a case of a short-seller trying to capitalize on a resulting equity sell-off.

That first audit, undertaken by Deloitte, did little to convince the investors who took bearish bets against NQ. Carson Block, the brains behind Muddy Waters, stuck steadfastly to his opinion that the company was primed for complete collapse. According to Block, the Deloitte exoneration (conducted in conjunction with NQ directors) was just another scam, and he told Reuters that the Deloitte audit was “just another in a long line of whitewashes carried out by China companies that are defrauding U.S. investors, written by directors in China who have no accountability to U.S. authorities."

Since Block’s salvo, the short float on NQ – which was already sizable – has metastasized. On May 30, the portion of shares bet against the company stood at 44.33%. On July 3, that number had grown to 48.97%, making NQ the most heavily shorted stock in the entire Tech sector.

Are NQ Investors Masochists?

So what keeps investors coming back to NQ? The company certainly has its legitimate backers, counting both Sprint and Samsung (SSNLF) as partners. The allure of potential profits to be made from contrarianism also helps considerably. If such a large percentage of investors are shorting the stock the share price could get squeezed up – that is, if the calls expire before auditors fail to uncover fraud in time, either via NQ’s stalling or (possibly) because there is no fraud to uncover.

Either way the price action of NQ, which sports substantially higher volume than should be expected of a small-cap tech play, should remain highly interesting for the foreseeable future, as either the bulls or the bears get rich on this battleground stock.  

As the July 3 half trading concluded, shares of NQ Mobile had fallen 32.25 percent to hit $4.58 a share. The company's stock has fallen 57.91% on the year.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for NQ
Jim Harrison
31 Oct 14 00:59:35
Of Interest: $ES $NQ $YM $TF $ZB Flash claims; financial institutions - targeted for high frequency trading - Le... http://t.co/fxLP4U0N9b
Russell Barbour
31 Oct 14 00:48:07
Review of Super_Trades http://t.co/9ofXiBU4hG $FB $TWTR $YY $NQ $LAKE
Maleah
31 Oct 14 00:47:05
http://t.co/GiMIvdu1Jf <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #stocks #trading
Maleah
30 Oct 14 23:58:58
REAL SuperTrades subscribers who are making HUGE money online stock trading!: http://t.co/PPDR8Frny7 $VSR $NQ $LIVE $REDF
Maleah
30 Oct 14 23:44:55
REAL SuperTrades subscribers who are making HUGE money online stock trading!: http://t.co/zJ9fuKC6iG $VSR $NQ $LIVE $REDF
Akseli Gran
30 Oct 14 22:58:59
RT @DeidreZune: US FUTURES RIPPING AS NIKKEI RISES 5 % After #BOJ PLEDGES OPENENDED #QE $ES $NQ $DOW FUTURES UP MORE THAN 1% $spx $aapl…
Ryan Morse, CMT CFP®
30 Oct 14 22:53:26
$NQ +50
DeidreZune
30 Oct 14 22:52:18
US FUTURES RIPPING AS NIKKEI RISES 5 % After #BOJ PLEDGES OPENENDED #QE $ES $NQ $DOW FUTURES UP MORE THAN 1% $spx $aapl $ma $baba $v
ARR
30 Oct 14 22:08:38
RT @SeekingAlpha: NQ Mobile Receives Unqualified Audit, Regains Compliance And Dispels Short Attacks http://t.co/l9eaokKpEV $NQ
Maleah
30 Oct 14 20:40:37
http://t.co/5qzSIjoPtA <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $SSYS $RGLS $DDD
Russell Barbour
30 Oct 14 20:19:51
The #1 Sign You’ll Succeed as Trader: http://t.co/nfV9KsDMME #stocks #trading $VSR $IBIO $NQ $LIVE $CBMX $NQ $YY $IKNX
Maleah
30 Oct 14 20:13:42
http://t.co/5qzSIjoPtA <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #stocks #trading
PennyStock Zone
30 Oct 14 20:01:47
http://t.co/iBFjWBITEB <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #daytrading
Maleah
30 Oct 14 19:10:59
http://t.co/GiMIvdu1Jf <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #stocks #trading
Sam E. Antar
30 Oct 14 18:50:43
RT @muddywatersre: Hmmm... Bison Capital low on cash? If so, where did it get the money to purportedly close on the transactions w/ $NQ? ht…
The Optionist
30 Oct 14 18:45:11
RT @GRAYTRADE: Don't think Ive had a losing call this week so far $QUIK $FMSA $KITE $EXTR $NQ $EQT $EMES $DGLY Follow for great short calls!
Jim Harrison
30 Oct 14 17:52:25
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Pricing and Hedging Long-Term Options. (arXiv:1410.8160v1... http://t.co/uB1U9Di2kp
Jim Harrison
30 Oct 14 17:52:25
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Efficient price dynamics in a limit order market: an util... http://t.co/VdvT6UEclR
Jim Harrison
30 Oct 14 17:52:24
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Optimal Allocation of Trend Following Strategies. (arXiv:... http://t.co/RTcJNYMNJJ
Jim Harrison
30 Oct 14 17:52:24
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: When does the stock market listen to economic news? New e... http://t.co/9lB6CAzqq2
Jim Harrison
30 Oct 14 17:52:23
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: The Model Confidence Set package for R. (arXiv:1410.8504v... http://t.co/iiwTerPp8t
Chimp
30 Oct 14 17:16:25
RT @racernic: someone hit ctrl alt del? $ES_F $TF_F $NQ well organized mkts
Wayne Nguyen
30 Oct 14 16:18:25
$NQ MAs serve as support & resistance as I posted chart b4 price action played out. Not sure it'll hold this time. http://t.co/bll1Ufa4TX
Russell Barbour
30 Oct 14 15:23:40
http://t.co/fmOyM2xelz <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #stocks #trading
Wayne Nguyen
30 Oct 14 14:51:15
$NQ maybe when market sells off nq will start next leg up. Just a guess.
TonyTrader
30 Oct 14 13:57:24
$BBRY $NQ always watch the build up.. many stocks are baking in the pop before the news lately... #justsaying #tradeit #swingtrades
Ciscohitt
30 Oct 14 13:47:57
$NQ O/N Levels http://t.co/vCikbO0ltG
SmallCaps
30 Oct 14 13:43:00
http://t.co/30rLXPYnuS <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #daytrading
GRAYTRADER
30 Oct 14 13:20:01
Don't think Ive had a losing call this week so far $QUIK $FMSA $KITE $EXTR $NQ $EQT $EMES $DGLY Follow for great short calls!
PsychSignal
30 Oct 14 13:01:18
43.0% increased bullish conversations in $NQ in the past 1 hour.
Jim Harrison
30 Oct 14 12:58:32
Of Interest: $ES $NQ $YM $TF $ZB The Morning Risk Report: Future of High Frequency Trading Regulation is Murky -... http://t.co/7MO2yuH5d6
Russell Barbour
30 Oct 14 12:51:48
The #1 Sign You’ll Succeed as Trader: http://t.co/nfV9KsDMME #stocks #trading $VSR $IBIO $NQ $LIVE $CBMX $NQ $YY $IKNX
Pope
30 Oct 14 12:34:29
I gave $NQ a call to ask when they plan on releasing their overdue Q1-3 returns for the 2014 fiscal year.... http://t.co/aY2ITHDOyO
PennyStock Zone
30 Oct 14 12:27:50
http://t.co/iBFjWBITEB <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #stocks #trading
Cashman
30 Oct 14 12:09:18
RT @Keubiko: @HaywoodGiaBloMe @muddywatersre Naw, I give it a thorough wiping with $NQ share certificates. Cheaper than TP now.
Keubiko
30 Oct 14 11:28:32
@HaywoodGiaBloMe @muddywatersre Naw, I give it a thorough wiping with $NQ share certificates. Cheaper than TP now.
Keubiko
30 Oct 14 11:07:26
Topeka's $NQ EBITDA forecast is soooo realistic. http://t.co/DPByXUSzfZ
Keubiko
30 Oct 14 11:03:43
@HaywoodGiaBloMe @muddywatersre I really, REALLY believe $NQ will do $133M in EBITDA next year like Topeka says. http://t.co/L0GRT4w0Yq
Ciscohitt
30 Oct 14 10:57:58
$NQ I have no resis until 05.25/10.75 http://t.co/oODFRoo9WN
ARR
30 Oct 14 10:25:43
RT @SludgeReports: $NQ Holding for Dec '15 targets. Soon everyone will know why. Traders and shorts just don't do research. Have a nice …
ARR
30 Oct 14 10:25:05
RT @EXPstocktrader: Update plus Q&A from $NQ Mobile http://t.co/jKH5E1sOCU
ARR
30 Oct 14 10:25:00
RT @SludgeReports: $NQ NQ Mobile IR Update for October 30, 2014 http://t.co/DPpP9WcRat
Nic
30 Oct 14 10:21:36
someone hit ctrl alt del? $ES_F $TF_F $NQ well organized mkts
Sam Sa
30 Oct 14 10:07:49
$NQ still doling out shares to anyone who'd treat them as currency. With 20-F catalyst out of the way, this may be a slow bleed to $2
Jacob Wolinsky
30 Oct 14 09:57:23
NQ Mobile IR Update for October 30, 2014 http://t.co/R81NoRRhMl $NQ
Sludge Reports
30 Oct 14 09:52:19
$NQ NQ Mobile IR Update for October 30, 2014 http://t.co/DPpP9WcRat
EXPstocktrader.com
30 Oct 14 09:51:25
Update plus Q&A from $NQ Mobile http://t.co/jKH5E1sOCU
Alan Farley
30 Oct 14 09:50:31
Big divergences today. Don't see stronger $ES bootstrapping $NQ up to its weekly highs, w/ $SOX looking like shit.
Skevaboy
30 Oct 14 09:47:37
$NQ Per IR "We will report all three quarters at the same time"
Skevaboy
30 Oct 14 09:44:02
$NQ NQ Mobile IR Update for October 30, 2014 http://t.co/fqdZRyZDbp
				
				
  +Follow July 3, 2014 10:53AM
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