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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
2 Sep 15 07:50:46
$NQ nice to see this back toward mid $3s. Crazy to think ppl wanted $8-$12 out of this. lol.
2 Sep 15 07:41:01
$NQ: Wall Street analysts bullish on NQ's earnings growth: http://t.co/wWNmUfVYuD http://t.co/LTXprQc8dM
2 Sep 15 07:35:13
$ISLE money train is moving choo choo tickets can be found at your local broker $amcn $eyes $wb $znga $tedu $dsky $nq $mcp $chop $rshcq $ff
2 Sep 15 06:44:35
$NQ targets 4218 4230 next target 4280 Short term upside targerts $nq_f $es_f #PTOtrader #Ronslevels
2 Sep 15 06:39:20
Under 4168 on the $NQ watch further downside #Ronslevels #PtoTrader $qqq $es_f
investor wired
2 Sep 15 06:24:32
Asian Stocks lower: $NQ $QIHU $JKS $AVGO $HIMX http://t.co/EOxbXuKcyn
2 Sep 15 05:21:50
$NQ 60m inner 4208.75/4165; O1 4229.25/4149.25;O2-key 4252.25 1st revesal/4118.75 fails
PennyStock Zone
2 Sep 15 04:37:37
http://t.co/0aD4seCQoT SuperTrades subscription for $907 per year!?!! BARGAIN $NQ $GLUU $GSAT $UEC
Zona Harrison
2 Sep 15 04:18:12
"5 Best Stocks Under $5 This Week" @EthanSRoberts $FORD $SIXD $NQ $CLF $BTU http://t.co/Qg5nwIixuU http://t.co/EFOtRxeAav
Jim Harrison
2 Sep 15 03:40:03
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheAlephBlog: Plan and Act, Don't React http://t.co/qTsVYFwXBA
Jim Harrison
2 Sep 15 03:40:02
Of Interest: $ES $NQ $YM $TF $ZB Vendor News: Infosys Finacle Launches Solutions for Payments Banks and Small Fina… http://t.co/YxDj85ePZe
Jim Harrison
2 Sep 15 03:40:02
Of Interest: $ES $NQ $YM $TF $ZB Women in Data Science Conference http://t.co/EkEgGVgrs9
Jim Harrison
2 Sep 15 03:40:02
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: The effect of stock market indexing on corporate tax avoida… http://t.co/H92YZd4wc5
Jim Harrison
2 Sep 15 03:40:01
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: A permutation Information Theory tour through different int… http://t.co/qSWvyGKqF6
Jim Harrison
2 Sep 15 03:40:01
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: ThePracticalQuant: Celebrating the real-time processing revival http://t.co/JpVtye7qRs
Jim Harrison
2 Sep 15 03:40:01
Of Interest: $ES $NQ $YM $TF $ZB Patek Philippe’s ‘Old Switcheroo’ tactic - http://t.co/oORntbmpts http://t.co/egSg4DEp88
Jim Harrison
2 Sep 15 03:40:00
Of Interest: $ES $NQ $YM $TF $ZB Quantum computer firm D-Wave claims massive performance boost http://t.co/zfxQlTah0J
2 Sep 15 00:51:29
http://t.co/kjjiAhoPPC <- the number one reason you will fail or succeed as a trader $LIVE $NVEE $CAMT $NQ $TWTR $STUDY
Capital Market Labs
1 Sep 15 22:55:38
Interactive Chart -> http://t.co/eOAzCBKEsX $NQ Revenue is Expanding. http://t.co/047UTiZ7yq
1 Sep 15 19:45:55
$ES $YM $NQ $TF Futures are setting up somewhat like the day session here up stuck drag and ultimately down... perhaps...
1 Sep 15 14:05:02
$NQ: Wall Street analysts bullish on NQ's earnings growth: http://t.co/wWNmUfEn63 http://t.co/6BXHS2JzmC
1 Sep 15 13:57:04
@sc1447 cut 1/3 of pnl on short, another 1/3 on the long on impulse i stayed in the trade, i didn't think $NQ wud go -148pts either #badidea
1 Sep 15 13:19:12
@toddgordontrade SPOOKY! $NQ $NASDAQ $NQ_F #PTOtrader #Ronslevels http://t.co/24Ei0XhV5C
Scott Cervo
1 Sep 15 13:18:36
$NQ Failed to penetrate Critical Price Point. Predominate Force are Sellers. Learn more @ http://t.co/ta6Why2rP8 #investing
Andrew Bannerman
1 Sep 15 13:10:32
Possibility we may 're-test momentum lows might back and fill a bit $nq
1 Sep 15 13:07:46
look at $NQ already at breakeven pnl level.. lol
1 Sep 15 13:01:55
DON't short low into the closing unless ya know it can go lower , use STOPs to protect ya trade $ES $NQ $TF $YM
1 Sep 15 12:46:07
THRUST Model just now entering the more bearish Oversold area where momentum selling occurs $TF $TZA $ES_F $TNA $NQ $NDX $SPX $ES $VIX $YM
1 Sep 15 12:42:16
$NQ -143pts
1 Sep 15 12:23:41
$NQ coming back down to reality, slowly fading after 4 broke.
Margin Hunt
1 Sep 15 12:00:15
"5 Best Stocks Under $5 This Week" @EthanSRoberts $FORD $SIXD $NQ $CLF $BTU http://t.co/WX5xyAzPFd http://t.co/8gq99KY50K
1 Sep 15 11:46:05
RT @RVchartchatter: $ES 1m oscillator upper/OB reset 1923.50//stop 1927.25; lower/OS cover 1914.50 retest; $NQ still holding
1 Sep 15 11:43:42
that $NQ move stalled right at my breakeven price
1 Sep 15 11:30:06
$ES 1m oscillator upper/OB reset 1923.50//stop 1927.25; lower/OS cover 1914.50 retest; $NQ still holding
Wu Weed
1 Sep 15 11:16:34
$nq - 4.20%
Clair Voight
1 Sep 15 11:00:59
$NQ Market Gainers: Rex Energy Corporation (REXX) And NQ Mobile Inc (ADR) (NQ) http://t.co/xcZ9WPSK09
1 Sep 15 10:42:49
RT @RVchartchatter: $NQ, $YM, $TF, $FDAX, $USDJPY held lows, $TF bleeds; $ES retest; 5m bounces off lower/OS 1914.25, nothing there, was wa…
1 Sep 15 10:37:29
$NQ, $YM, $TF, $FDAX, $USDJPY held lows, $TF bleeds; $ES retest; 5m bounces off lower/OS 1914.25, nothing there, was waiting for 1m to reset
1 Sep 15 10:33:55
$ES_F do not see in the hole :) $SPY and get caught - balance day on $SPY and $RUT $NQ not so much
1 Sep 15 10:25:31
1 Sep 15 10:22:54
$ES 1m tightening oscillator 1923.50 caught upper/ false move, open to chip lower lows for next 1m extreme; $NQ , $TF, $FDAX havent busted
Andrew Bannerman
1 Sep 15 10:19:59
$NQ overnight low: 4148
1 Sep 15 10:10:37
THRUST finally moving lower more quickly frm Overbought STILL NOT OVERSOLD but gettin closer $TF $TZA $ES_F $TNA $NQ $NDX $SPX $ES $VIX $YM
Alan Farley
1 Sep 15 10:08:38
$NQ bull div, holding opening print.
brian sweetheart
1 Sep 15 09:29:51
Voted top trading group. http://t.co/5eVXN8RJLp Related: $NOK $ATML $AVP $BBRY $CRC $AKS $NQ
John Ablemann
1 Sep 15 09:23:23
$NQ Market Gainers: Rex Energy Corporation (REXX) And NQ Mobile Inc (ADR) (NQ) http://t.co/hChpLXrMhw
Wall Street
1 Sep 15 09:12:44
http://t.co/J58EN2Hzp9 IN PLAY: $FCEL $LFVN $BDSI $EJ $NQ $PES $ELNK $CBB $RENN $INFI $PGNX $QLGC $PPP $PMCB $BGCP http://t.co/wJSYzdugYv
Jim Harrison
1 Sep 15 08:35:03
Of Interest: $ES $NQ $YM $TF $ZB Intuit Small Business Index: A First Look http://t.co/pXgh4YkXKw
1 Sep 15 07:51:19
http://t.co/kjjiAhoPPC <- the number one reason you will fail or succeed as a trader $LIVE $NVEE $CAMT $NQ $TWTR $STUDY #stocks
Make Millions
1 Sep 15 07:51:18
A collection of testimonials from satisfied super_trades subscribers! http://t.co/as7r165Fxq $FB $YHOO $OIL $NQ $LIVE
  +Follow July 3, 2014 10:53AM



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