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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. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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Results for NQ
Russell Barbour
28 Mar 15 15:32:54
http://t.co/fmOyM2xelz <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $SSYS $RGLS $DDD
a nobody
28 Mar 15 12:09:48
RT @stt2318: $NQ bottom watch http://t.co/eceGf28OhS
Media Sentiment
28 Mar 15 11:49:51
$NQ received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 12
Garage Traders
28 Mar 15 11:43:31
RT @stt2318: $NQ bottom watch http://t.co/eceGf28OhS
28 Mar 15 11:42:15
$NQ bottom watch http://t.co/eceGf28OhS
Brandon Hayward
28 Mar 15 11:41:27
$NQ - Coiled up in a Wedge. Strong 2-day volume. http://t.co/D7SCEvb7WR
28 Mar 15 11:12:14
Is $NQ Special Shareholder Roast Blend the next distruptive Starbucks-killer-concept in China? http://t.co/vy98dtVOyW http://t.co/QbBhqSQ59A
Jim Harrison
28 Mar 15 10:15:04
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: PatrickBurns: US market portrait 2015 week 13 http://t.co/pN9bfDgFPp
Jim Harrison
28 Mar 15 10:15:04
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: iMFdirect: Fiscal Policy And Structural Reform http://t.co/RSFLJaHyTV
Mark Trader
28 Mar 15 10:05:48
The last http://t.co/8hGh2pxMWQ alert popped over 400%. So sweet and free to sign up. $HOV $URZ $PZOO $ENDRQ $SCRC $NQ
28 Mar 15 08:35:10
Wow the last pick from http://t.co/p3LC54H2W5 popped over 450%. Nice for being free. $SIRI $ATOS $NQ $ZNGA
Radio Silent
28 Mar 15 08:08:18
March 27,2015 Weekend Update $SPY $IWM $USO $GLD Small Caps: $NQ $EXXI $MDR $LEI $ONCY $NETE $AKS $BLRX OTC... http://t.co/B3pDtqwDPH
28 Mar 15 06:45:04
$NQ Daily working higher low opens air > 4336.00, 4348.25 to 4367.50//closing S 4297.25, key closing S 4277.00 for negative downgrade
28 Mar 15 02:52:26
Top 100 Ranked Stocks | Momentum Trading with RaginCajun http://t.co/pTG0iq0Zrk $TNK $GLUU $NQ $YNDX $WUBA $YHOO $ETFC
hft info
27 Mar 15 22:25:16
RT @BookMapXray: Of Interest: $ES $NQ $YM $TF $ZB New Aequitas stock exchange aims to deter high-frequency trading - Brandon Sun http://t.c…
Jim Harrison
27 Mar 15 20:31:18
Of Interest: $ES $NQ $YM $TF $ZB New Aequitas stock exchange aims to deter high-frequency trading - Brandon Sun http://t.co/Ez2CZkBDjN
27 Mar 15 19:12:05
Market~Thoughts for #Trading Fri into Next Mon http://t.co/a0vGoeNYZ7 …] $VIX $INDU $YM $NQ $NDX $QQQ $ES $SPX $GLD $TF $RUT $IWM $AAPL $xau
27 Mar 15 17:05:13
$ NVDA, $ABC, $AET, $AVGO, $BSX, $CVS, $DD, $DGX, $DPS, $MDT, $MNST, $NQ $ROST $TSCO $WM, $ZTS $SABR http://t.co/GiCkdmBb5r
Jim Harrison
27 Mar 15 15:43:37
Of Interest: $ES $NQ $YM $TF $ZB High-Frequency Trading Worries Are Fading, Convergex Finds - Bloomberg http://t.co/CzNISPjj3W
Harry Walkman
27 Mar 15 15:03:42
$NQ NQ Mobile Inc (ADR) (NQ) Confidence High After Q4 Results http://t.co/JzhJ1Equvf
27 Mar 15 14:28:54
RT @RyanMorse33: Very boring day on the trading front. For those that left early we managed to rally back to the highs of the day and $NQ 5…
Ryan Morse, CMT CFP®
27 Mar 15 14:23:35
Very boring day on the trading front. For those that left early we managed to rally back to the highs of the day and $NQ 50dma on #Yellen.
Nine Stocks
27 Mar 15 14:18:05
MA10-MA50 Bull Crossover Stocks (Mar.27): $BRX, $HAL, $LXK, $NQ, $XYL, $ZMH http://t.co/HMsJ6w5v1a
Garage Traders
27 Mar 15 13:15:30
RT @TheMrDev: @NorthmanTrader MrDev never jokes about Markets Action/ Direction Have Good~Weekend $VIX $INDU $YM $NQ $NDX $QQQ $ES $SPX $GL…
27 Mar 15 13:14:09
@NorthmanTrader MrDev never jokes about Markets Action/ Direction Have Good~Weekend $VIX $INDU $YM $NQ $NDX $QQQ $ES $SPX $GLD $TF $SPY $IWM
Stock Trade Alerts
27 Mar 15 13:03:41
How Sonar top NYSE looked @ today's open: $OLN $WGO $MPO $GDP $OCN $CLF $VNCE $NQ $CJES $CCM | SH #TradeAlerts ➡ via http://t.co/LHfNLyERf1
Stock Horizon LLC
27 Mar 15 13:00:29
How Sonar top NYSE looked @ today's open: $OLN $WGO $MPO $GDP $OCN $CLF $VNCE $NQ $CJES $CCM http://t.co/ZsJ8IywzRp
27 Mar 15 12:51:54
Already Done Good~Luck See Ya Monday Have a Great Weekend ! $RUT $VIX $INDU $YM $NQ $NDX $ES $SPX $GLD $TF $SPY $IWM "In the THRUST I TRUST"
Wayne Nguyen
27 Mar 15 12:48:33
$NQ Market broke out. Yellen, make her, $NQ, break out now! http://t.co/qq75T6mJGb
27 Mar 15 12:47:17
$RUT LONGS frm Yesterdays LOW of DAY Will be Exited @Close and REV~100% Short 4 Mon $VIX $INDU $YM $NQ $NDX $QQQ $ES $SPX $GLD $TF $SPY $IWM
27 Mar 15 12:46:51
RT @VictorZubarev: $ES $SPX $SPY $NQ $NASDAQ COMP $QQQ $YM $DJIA $DIA If everybody goes to "Cash" then @CNBC is out of business,closing on …
Victor Zubarev
27 Mar 15 12:42:42
$ES $SPX $SPY $NQ $NASDAQ COMP $QQQ $YM $DJIA $DIA If everybody goes to "Cash" then @CNBC is out of business,closing on the lows of the week
27 Mar 15 12:27:41
Dev Signal for the close but First Watch for the #Yellen Effect. $VIX $INDU $YM $NQ $NDX $QQQ $ES $SPX $GLD $TF $RUT $IWM
Victor Zubarev
27 Mar 15 12:24:31
$YM $DJIA $DIA $ES $SPX $SPY $NQ $NASDAQ COMP $QQQ This wk: Weekly bar: Bearish Engulfing Dark Cloud Cover
27 Mar 15 12:03:05
Market~Thoughts #trading Fri said "You now know..Monday" http://t.co/a0vGoeNYZ7 …] $VIX $INDU $YM $NQ $NDX $QQQ $ES $SPX $GLD $TF $RUT $IWM
Large Void Bot
27 Mar 15 12:00:26
Popular: $UGAZ, $OCN, $DWTI, $PBR, $OPWR, $FXI, $BNO, $NQ, $ERY, $JAKK, $JO
9trading Stocks
27 Mar 15 11:42:09
$NQ has been showing support at 3.69 and resistance at 4.28. The buy rating : 5.5. http://t.co/1HXp6tVHYL
27 Mar 15 11:26:48
Wow the last pick from http://t.co/p3LC54H2W5 popped over 450%. Nice for being free. $SIRI $ATOS $NQ $ZNGA
Laszlo Nagyferenczi
27 Mar 15 11:23:18
Don't let the $SPX $NQ tight trading range grind you.
27 Mar 15 11:07:25
@NorthmanTrader HUH? Depends on what you're buying and for how long? $RUT doin fine today. Mndy is another day $VIX $INDU $ES $NQ $NDX $QQQ
27 Mar 15 10:08:58
Time to raise Your Trading Goals, If you are trading with the THRUST they are about to become achievable $VIX $TF $NQ $ES $YM $RUT $NDX $SPX
abhishek m r
27 Mar 15 10:01:09
Commented on StockTwits: $NQ Long way to go!! Eyes @ 4.45 - 4.65 http://t.co/7snCgjLqkJ
Wayne Nguyen
27 Mar 15 09:11:07
$NQ Could be bullish pennant. http://t.co/AmQks3sKnH
27 Mar 15 09:09:06
Thinking $nq short squeeze very very close. 20% short on float. Solid pops in last few days.
Kristen Compton
27 Mar 15 08:51:48
@KCompton_RPC: Hmmm incentivized by the truth or money?!?! #SMH #BS #SHORT $NQ @Vijay_Hedges http://t.co/RAZAFblcqp
27 Mar 15 08:51:28
27 Mar 15 08:30:36
$ES 60m having difficulty 2055.00-2055.50; mutes 15m nose> 2054.25; stopping 2051.00; tootight, no clear guidance $NQ, $TF, $DJTA
Media Sentiment
27 Mar 15 08:17:04
$NQ received a new alert. Find out why at http://t.co/nZwqReM0tj #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 197
27 Mar 15 08:14:02
$NQ strong
Trade Under Ten
27 Mar 15 08:08:27
RT @zerosum24: Whoops. Posted another chart I like $BCLI but here's the $NQ chart - http://t.co/MHnzFrFHS0
  +Follow July 3, 2014 10:53AM



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