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PricewaterhouseCoopers Expands Audit of NQ Mobile

  +Follow July 3, 2014 10:53AM
Tickers Mentioned:

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
PennyStock Zone
29 Aug 14 18:08:06
PennyStocking DVD by Timothy Sykes http://t.co/8EKkd9Ujnt #stocks #trading #nyse $YY $NQ $CAMT $FEYE $MINE $SALE $FB $SAEX
Market Compass
29 Aug 14 16:36:20
$NQ: [video] Block: Pretty Odd if Bid for NQ Mobile Is for Real http://t.co/nhpkryGIaf http://t.co/pmK4yvk7Fl
Jim Harrison
29 Aug 14 16:25:03
Of Interest: $ES $NQ $YM $TF $ZB 5 Things To Ponder: Labor Day Edition by Lance Roberts of STA Wealth Management http://t.co/cMUWarPzic
PennyStock Zone
29 Aug 14 15:40:11
I am a VERY HAPPY subscriber to SUPERTRADES service check it out http://t.co/Ho9ydXHTWl $vnom $galt $tsla $emms $pamt $grh $nq
PennyStock Zone
29 Aug 14 15:22:54
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PennyStock Zone
29 Aug 14 15:14:51
I am a VERY HAPPY subscriber to SUPERTRADES service check it out http://t.co/Q6vtkuSPbk $vnom $galt $tsla $emms $pamt $grh $nq
Jim Harrison
29 Aug 14 14:30:34
Of Interest: $ES $NQ $YM $TF $ZB Allston Accused by HFT Rival of Manipulative Trading - Bloomberg http://t.co/HmJHjOU0S5
Frim Company
29 Aug 14 14:29:33
@HaywoodGiaBloMe A frustrated $NQ long
Stock News Updates
29 Aug 14 13:36:18
$NQ: NQ Mobile Gain Falls Short of Proposed Buyout Premium http://t.co/ca2Ae7c9v8 http://t.co/7CgZOBc0Nt
Wayne Nguyen
29 Aug 14 12:51:24
$KNDI $NQ Goodnite folks. Enjoy a long weekend with you love ones.
Wayne Nguyen
29 Aug 14 12:40:46
$NQ pull back http://t.co/WLR4FJWmIz
Wayne Nguyen
29 Aug 14 12:38:03
$KNDI Some shorts are covering to avoid long wkend hold $NQ
PennyStock Zone
29 Aug 14 11:55:01
PennyStocking DVD by Timothy Sykes http://t.co/8EKkd9Ujnt #stocks #trading #nyse $YY $NQ $CAMT $FEYE $MINE $SALE $FB $SAEX
finance jerk
29 Aug 14 10:54:48
Also sold $NQ. Cleaning house.
Wayne Nguyen
29 Aug 14 10:41:29
$NQ Long needs to close above 6.51 Yes I said CLOSE.
29 Aug 14 10:41:02
$ES $NQ $YM Oh Mama! These markets want to go out on their highs. Looks like month end window dressing. Tuesday could http://t.co/Rhw6PUPRVB
Market Compass
29 Aug 14 10:36:18
$NQ: NQ Mobile Inc. Announces Management Changes http://t.co/pnfsrqzTa9 http://t.co/QFtMljhiC4
Heywood Giablome
29 Aug 14 10:11:52
@applengineer #DONKEY and how do you suppose they sell stock while in a blackout period? It's not possible. Douchebag! $NQ
29 Aug 14 10:08:59
$NQ 11.2 million ADS shares 2012 mgt lock-up agreement expires today. Over two years of "humble beginnings" coning to an end? Wait and see.
29 Aug 14 09:11:43
$VIPS next $NQ ? Freefall on strong volume http://t.co/c7kQYqtmmJ
29 Aug 14 09:04:21
Top Short Squeeze Technology Stocks http://t.co/E01kwmGbWX $CSLT, $EBIX, $NQ, #shortsqueeze
Jim Harrison
29 Aug 14 08:26:00
Of Interest: $ES $NQ $YM $TF $ZB A Global Passive Benchmark with ETFs and Factor Tilts by Adam Butler, Mike Phil... http://t.co/20BT4iPKMX
29 Aug 14 07:36:42
Commented on StockTwits: "@reginator: $NQ Music Radar pre-installed on Samsung Galaxy Gear Smartwatch... http://t.co/ahOUMZyHcc
Market News
29 Aug 14 07:36:18
$NQ: As NQ CFO Bails, the Questionable Plot Thickens http://t.co/V99BU824i3 http://t.co/SnsEu7sojI
29 Aug 14 07:10:56
"@Congostockchat: $NQ NEWS: CEO CONFIRMING 500M + In revs expected in 2015. IMO that is 2.50 to 3.00/share EPS http://t.co/xNrNSHZ9tO"
Quoth the Raven
29 Aug 14 06:41:35
RT @unemon1: looks like $XXII's chosen the $NQ way ... best way to contrast fraud allegations ... is to issue BS ACHIEVEMENTS PRs: http://t…
29 Aug 14 06:32:49
$NQ Monthly tests top Aug inside range LT RANGES: Inside 4079.25*/3970.25 Outside 4116.75/3876.50 Outside2 4173.25/3782.50 concentrated
29 Aug 14 06:32:03
RT @TraderNewsDaily: $GSPN on breakout watch after up 33% yesterday. Related: $DRYS $ERBB $FCEL $FITX $FOLD $MJNA $MNKD $USU $INCC $NIHD $…
29 Aug 14 06:31:53
$NQ Weekly extending upper channels IT RANGES: Inside 4094.25/4050.25 begins consolidation...outside 4143.25/4002.75
29 Aug 14 06:31:14
$NQ Daily momentum bends Inside 4078.75/4062.50 5SMA momentum loss close;Outside1 4082.75 for air/4055.75; Outside2 4091.00/4047.00 for air
Trader News Daily
29 Aug 14 06:26:47
$GSPN on breakout watch after up 33% yesterday. Related: $DRYS $ERBB $FCEL $FITX $FOLD $MJNA $MNKD $USU $INCC $NIHD $MCP $NTEK $NQ $VPOR
29 Aug 14 06:23:00
http://t.co/l4qmOlz0qf fitzkarz: NASDAQ DIP and RIP: Good morning all, $DRYS $HZNP and $NQ http://t.co/wGQgk2ks9s
29 Aug 14 06:14:35
Short Squeeze Alerts $GME $INSY $CSLT $ESI $WLT $BTH $NQ $JAKK $EBIX http://t.co/vRTWxV5Spu
Jim Harrison
29 Aug 14 05:47:52
Of Interest: $ES $NQ $YM $TF $ZB Putting Flash Memory to Work in Financial Markets http://t.co/XrWoRwOIpu
29 Aug 14 05:38:20
looks like $XXII's chosen the $NQ way ... best way to contrast fraud allegations ... is to issue BS ACHIEVEMENTS PRs: http://t.co/iQErW83vXB
Companies in News
29 Aug 14 05:36:17
$NQ: Carson Block: NQ Mobile Bid Possibly Fake; Toyed With Going Short Herbalife http://t.co/4TS2MOUdxI http://t.co/fVKNhFACEn
James P Worthy
29 Aug 14 05:31:17
$NQ Why NQ Mobile (NQ) Stock Is Gaining Today http://t.co/DwwSxkdaQf
Sludge Reports Live
29 Aug 14 04:37:36
$NQ One last one with some additional info, from the conference http://t.co/6KDkVcNImL
Business News Watch
29 Aug 14 04:36:18
$NQ: NQ Mobile CFO resigns, cites family reasons http://t.co/Alv5KSKUia http://t.co/1W6xSu6djQ
Sludge Reports Live
29 Aug 14 04:34:37
$NQ Mobile platform strategy powerpoint http://t.co/TKI41rpSrV
Sludge Reports Live
29 Aug 14 04:32:25
$NQ Yu interview highlights http://t.co/lbUNpEvxne
29 Aug 14 04:28:35
$NQ 60min working 4085/4076.50; 4092.50/4071.00 outter
Jim Harrison
29 Aug 14 04:27:40
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheFinancialServicesClub: Wallet wars haven't really started yet ... http://t.co/QDq5S652a2
Jim Harrison
29 Aug 14 04:27:40
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Spectrum-based estimators of the bivariate Hurst exponent... http://t.co/bnfAagir31
Jim Harrison
29 Aug 14 04:27:39
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Can Google searches help nowcast and forecast unemploymen... http://t.co/4ksl2llPM3
Jim Harrison
29 Aug 14 04:27:39
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Hedging Conditional Value at Risk with Options. (arXiv:14... http://t.co/mHR2ar5Ihg
Jim Harrison
29 Aug 14 04:27:38
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Stochastic Perron for Stochastic Target Games. (arXiv:140... http://t.co/VDrLJufaZv
Stock Market News
29 Aug 14 01:36:18
$NQ: Trader's Watch List: NQ Mobile Inc (ADR) (NYSE:NQ), QLogic Corporation ... http://t.co/1nzDteme73 http://t.co/7e3OKdg6eR
Jim Harrison
29 Aug 14 00:46:02
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheAlephBlog: Two Portfolios. Pick One. http://t.co/R3YhtS8pF6
Heywood Giablome
29 Aug 14 00:28:03
@FrimLLC it is a Chinese co on a U.S. exchange & jackasses like you don't do any real research, of course they will provide biz updates $NQ
  +Follow July 3, 2014 10:53AM



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