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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
PennyStock Zone
26 Nov 14 21:11:51
Review of Timothy Sykes book: An American Hedge Fund: http://t.co/37mHH9cdhB $YHOO $NQ $FB $STUDY $BBRY $HEB $ABGB
PennyStock Zone
26 Nov 14 19:45:24
http://t.co/iBFjWCzH2N <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #daytrading
Old Bull Lee
26 Nov 14 18:57:49
Those $ES traders are pikers compared to the $NQ folks.
PennyStock Zone
26 Nov 14 17:23:21
RT @BargainTrapper: GoPro HERO4 SILVER! Great gift idea! http://t.co/P2qqH3azJe $VSR $NQ $IBIO $ICAD $NVEE http://t.co/BEXk3vX04P
SmallCaps
26 Nov 14 17:23:21
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Malia B
26 Nov 14 17:17:45
GoPro HERO4 SILVER! Great gift idea! http://t.co/P2qqH3azJe $VSR $NQ $IBIO $ICAD $NVEE http://t.co/BEXk3vX04P
Dave
26 Nov 14 17:17:32
Nailed over 200% in gains this week at http://t.co/qY5MPlJPrU. Pro members get alerts 1 day early. $AU $TASR $PDS $FITB $NQ
PennyStock Zone
26 Nov 14 16:30:05
Review of Timothy Sykes book: An American Hedge Fund: http://t.co/37mHH9cdhB $YHOO $NQ $FB $STUDY $BBRY $HEB $ABGB
Russell Barbour
26 Nov 14 15:51:28
http://t.co/Zmv3NrOg79 <-- review of Timothy Sykes book: An American Hedge Fund $FB $TWTR $BBRY $YHOO $NQ $HURC
PennyStock Zone
26 Nov 14 15:41:51
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SmallCaps
26 Nov 14 14:55:14
http://t.co/t9v4IO2vow <<-- Tandem Trader dvd video #stocks #trading #nyse #nasdaq $FB $TWTR $STUDY $NQ
PennyStock Zone
26 Nov 14 14:31:13
http://t.co/Xk9M7IQZ3e <<-- Tandem Trader dvd video #stocks #trading #nyse #nasdaq $FB $TWTR $STUDY $NQ
PennyStock Zone
26 Nov 14 13:48:04
http://t.co/fVzJIg8XPj <-- Last Year this millionaire trader made $163,000 during Thanksgiving week! $LIVE $VSR $NQ $HURC
stockroads
26 Nov 14 13:35:55
Weekly Review Thanksgiving edition $AAPL $BABA $BAH $BLL $CMN $COV $CSX $JNS $LB $MNST $NAVI $NKE, $NQ $ROST $VRTX http://t.co/WhZLAzzl1X
Russell Barbour
26 Nov 14 13:28:39
http://t.co/fmOyM2OPtD <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #daytrading
RogerV
26 Nov 14 13:24:04
$NQ nice squeezer into close 4313.25 to 4317.75
SmallCaps
26 Nov 14 13:02:52
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Russell Barbour
26 Nov 14 13:02:16
http://t.co/Zmv3NrOg79 <-- review of Timothy Sykes book: An American Hedge Fund $FB $TWTR $BBRY $YHOO $NQ $HURC
PHARMD
26 Nov 14 12:35:13
$nq added more today, highly manipulated stock. shorts will be toasted, need pr about earnings
Greg David
26 Nov 14 12:22:21
I want to give http://t.co/m2LNLuLe8I a shout out. Banked 125% last week thanks to them. You guys rock! $XCO $NQ $COCO $DNDN
Russell Barbour
26 Nov 14 11:39:31
Super Trades Review Video: http://t.co/5mSXpQjPGW #stocks #trading #nyse #nasdaq $FB $VSR $IBIO $NQ $HURC
Russell Barbour
26 Nov 14 11:02:01
Tim Ferris 4-Hour work Week: http://t.co/18fTr0zbL1 $study $nq $DVCR http://t.co/y5Foo3UY5r
PennyStock Zone
26 Nov 14 10:56:15
http://t.co/OVGvoQsWJ5 <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #daytrading
Ugo
26 Nov 14 10:45:51
RT @ACInvestorBlog: "@StockBoardAsset: $NQ Sym tri here latter construction http://t.co/59J2tKGpif" based on options, we could see a strong…
Ugo
26 Nov 14 10:45:36
RT @MONEYEMPIRE: $NQ is coiled
Rich
26 Nov 14 10:16:26
3 time $NQ went 4310.50 bid with no .75 trade
PennyStock Zone
26 Nov 14 10:15:11
RT @BargainTrapper: GoPro HERO4 SILVER! Great gift idea! http://t.co/P2qqH3azJe $VSR $NQ $IBIO $ICAD $NVEE http://t.co/5rzmAheMsU
Malia B
26 Nov 14 10:13:28
GoPro HERO4 SILVER! Great gift idea! http://t.co/P2qqH3azJe $VSR $NQ $IBIO $ICAD $NVEE http://t.co/5rzmAheMsU
MoneyEmpire
26 Nov 14 10:06:59
$NQ is coiled
Antonio Costa
26 Nov 14 10:04:22
$NQ updated chart. This stock is about to Explode. MACD crossover today, sweet... http://t.co/5LPN6ZpMna
Antonio Costa
26 Nov 14 09:29:41
$NQ second round...volume picking up.... if it breaks 7.50 shorts will start covering. More than 50% of float is sold short. Oh my...
FonsieTrader
26 Nov 14 09:23:27
$NQ EPIC short squeeze ahead!!! Someone purchased 10K calls early this week, strikes Jan $10 and $15.
StockSpotter
26 Nov 14 09:16:17
$NQ up 2.6% to 7.44 bullish at a cycle trough #stocks #markets #trading http://t.co/vCboOiWWhT
PennyStock Zone
26 Nov 14 09:14:26
http://t.co/Xk9M7IQZ3e <<-- Tandem Trader dvd video #stocks #trading #nyse #nasdaq $FB $TWTR $STUDY $NQ
Sank
26 Nov 14 09:12:49
@LunaElfica Te soy sincero ? no descarto 4583,4 si pasa el 4345. $NQ
Antonio Costa
26 Nov 14 09:12:16
"@StockBoardAsset: $NQ Latter construction of Sym tri labeled watch it here http://t.co/B9Y1dwkxhl" if it breaks next stop $9
StockBoardAsset
26 Nov 14 09:09:48
$NQ Latter construction of Sym tri labeled watch it here http://t.co/5iYKbePXW1
StockBoardAsset
26 Nov 14 09:07:51
RT @ACInvestorBlog: Watch $NQ over 7.50...squeeze into the close :)
Antonio Costa
26 Nov 14 09:07:34
Watch $NQ over 7.50...squeeze into the close :)
Media Sentiment
26 Nov 14 09:00:15
$NQ received a new alert. Find out why at http://t.co/5lwmDm2SCs #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 222
Antonio Costa
26 Nov 14 09:00:09
$NQ someone knows something....i bot this stock due to unusual call options activity.
MoneyEmpire
26 Nov 14 08:59:43
$NQ :)
StockBoardAsset
26 Nov 14 08:58:18
RT @ACInvestorBlog: "@StockBoardAsset: $NQ Sym tri here latter construction http://t.co/59J2tKGpif" based on options, we could see a strong…
Antonio Costa
26 Nov 14 08:56:58
"@StockBoardAsset: $NQ Sym tri here latter construction http://t.co/59J2tKGpif" based on options, we could see a strong move higher
Antonio Costa
26 Nov 14 08:56:04
$NQ Alert!!!!! NHOD
StockBoardAsset
26 Nov 14 08:54:32
$NQ Sym tri here latter construction http://t.co/q7zSM5DKRe
SmallCaps
26 Nov 14 08:29:21
http://t.co/t9v4IO2vow <<-- Tandem Trader dvd video #stocks #trading #nyse #nasdaq $FB $TWTR $STUDY $NQ
Dave
26 Nov 14 08:23:17
I didnt know the pro members get the opening bell alerts from http://t.co/qY5MPlJPrU 1 day early. $ISCO $MRVL $GLUU $NQ $IDTI
umbi1111
26 Nov 14 08:19:50
RT @ACInvestorBlog: Watch $NQ over 7.50...... huge call activity + huge short interest = dramatic move ahead. potential short squeeze candi…
PennyStock Zone
26 Nov 14 08:12:09
http://t.co/iBFjWCzH2N <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $YY $FB #daytrading
				
				
  +Follow July 3, 2014 10:53AM
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