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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
Jim Harrison
27 Apr 15 08:01:41
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: iMFdirect: Multi-Track Monetary Policies in Advanced Economies: What T… http://t.co/EH3Ua8nGeJ
Can Demiryürek
27 Apr 15 07:40:58
$NQ Yukarı Kırılma
Ty Reamer
27 Apr 15 07:40:18
$NQ going for HOD
27 Apr 15 07:31:06
$NQ still trying feeling it breaks soon
Intrepid Trader
27 Apr 15 07:16:08
$NQ ready for BO following the other mobile's such as $MOBI
27 Apr 15 07:15:16
$NQ is also testing TL + fib http://t.co/wFlQUp2YcO
Stock Enthusiast
27 Apr 15 07:12:15
$NQ is rising on the daily
Small Cap Trader
27 Apr 15 07:02:38
in 4.22 $NQ - http://t.co/WaWIkPZjS6 http://t.co/5ApqCKzORW #stockcharts
Ty Reamer
27 Apr 15 06:46:55
$NQ watch for potential squeeze
Jim Harrison
27 Apr 15 06:41:18
Of Interest: $ES $NQ $YM $TF $ZB Turnover explosion at Shanghai stock exchange has too many zeros for software http://t.co/5HxKyTl7SF
Jim Harrison
27 Apr 15 06:41:18
Of Interest: $ES $NQ $YM $TF $ZB 10 Modern Statistical Concepts Discovered by Data Scientists http://t.co/zl55C30YqE
Jim Harrison
27 Apr 15 06:41:17
Of Interest: $ES $NQ $YM $TF $ZB The economic consequences of George Osborne: covering up the austerity mistake http://t.co/GqH7Bm5YYH
Jim Harrison
27 Apr 15 06:41:17
Of Interest: $ES $NQ $YM $TF $ZB Are Traditional Providers Finally Taking the Robos Seriously? - Wealth and Capita… http://t.co/6CbLJnntx2
Jim Harrison
27 Apr 15 06:41:17
Of Interest: $ES $NQ $YM $TF $ZB Greg B Davies on Twitter http://t.co/4OJyBYh8pt
Mark Trader
27 Apr 15 06:33:23
Cool trading site I just found. https://t.co/T2poBg5XNW $HL $HERO $WLT $MUX $CYTX $OIBR $VG $TC $NQ $UMC
randall millard
27 Apr 15 06:28:19
RT @TraderGoalieOne: Look for the GAP & RUN in the $ES ,. $NQ and $YM You know how to play them...
27 Apr 15 06:27:12
RT @TraderGoalieOne: FYI: The $NQ is opening up outside the Bollinger Band.
27 Apr 15 06:27:02
RT @TraderGoalieOne: FYI: The $NQ is opening up outside the Bollinger Band.
Robert Dunn
27 Apr 15 06:26:43
FYI: The $NQ is opening up outside the Bollinger Band.
J Washington
27 Apr 15 06:26:26
RT @TraderGoalieOne: Look for the GAP & RUN in the $ES ,. $NQ and $YM You know how to play them...
Brannigan Barrett
27 Apr 15 06:26:08
RT @TraderGoalieOne: Look for the GAP & RUN in the $ES ,. $NQ and $YM You know how to play them...
27 Apr 15 06:25:29
RT @TraderGoalieOne: Look for the GAP & RUN in the $ES ,. $NQ and $YM You know how to play them...
Robert Dunn
27 Apr 15 06:24:44
Look for the GAP & RUN in the $ES ,. $NQ and $YM You know how to play them...
27 Apr 15 06:15:49
everyone seems to have a topoff on the $NQ, wasn't expecting this much of a rise but hey let's see what happens
Alan Farley
27 Apr 15 06:14:28
Nasdaq-100 $NQ $QQQ entering most volatile chunkn of March 2000 trading range. (some of us were "there" at the time) http://t.co/BLuy0jYnGR
Alan Farley
27 Apr 15 05:25:40
$ES tickling February top. Good day to watch and measure N100 "bootstrap" effect. $NQ $QQQ. http://t.co/6bLHmGakHe
27 Apr 15 04:37:21
$NQ weekly targets - upside blue sky, fibs? Careful Shorts. downside 4480, 4434, 4407, 4364. Many large gaps, careful! aapl,fed,jobs
27 Apr 15 04:22:27
$NQ 60m working contin > 4539.00, inner lift 4548.25/4530; outter 4557.50/4524.75 breaks o/n low..4518.75 back fill
Jim Harrison
27 Apr 15 03:29:29
Of Interest: $ES $NQ $YM $TF $ZB Vendor News: House of Fraser Selects Infosys to Deliver a Strategic Retail Transf… http://t.co/c4oaGeG2LU
Jim Harrison
26 Apr 15 23:32:45
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: Luigi.Ballabio: Chapter 7, part 6 of 6: an example of tree-based engine http://t.co/pogGLu7ous
Jim Harrison
26 Apr 15 19:44:49
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Testing the performance of technical trading rules in the C… http://t.co/TrcOLJ0Twy
Jim Harrison
26 Apr 15 19:44:48
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Population viewpoint on Hawkes processes. (arXiv:1504.06563… http://t.co/P3tsoNKLxk
26 Apr 15 18:34:09
Pro members at http://t.co/L46QQZciCc get alerts early before they make big moves. Related: $AVXL $CRK $TEU $NQ $FXCM $GTE $ZNGA
26 Apr 15 16:29:41
$ES $SP lagging whilst $NQ `s have moved beyond Tier1`s bracketed expectations $NQ+(4.75)to*9.5* STARd is next http://t.co/n6uKkBa9MX
26 Apr 15 15:47:09
$NQ wkly/daily context http://t.co/dlhPC4tJ76
26 Apr 15 15:23:11
$ES 60m not much to start; inside range 2116.00/2109.00;outter1 2119.25/2105.75; $NQ 60m contin 4538.75//4516.50 mom loss
26 Apr 15 15:03:19
we have as XPECTED BRACKETED We look for STARd for direction confirmation $ES $SP+(1.18) to*2.37* $NQ+(2.37)to*4.75* http://t.co/XguwzFAEgo
26 Apr 15 14:42:01
When the bell rings 4pm est We Xpect to see Bracketed Or STARd $ES $SP-or+(9.5)to*19* $COMP $NQ -or+ ( 19+4=22 )to * 38+4=42 *
26 Apr 15 14:38:33
At 6pm est. we expect Bracketed figs to then move beyond STARd in confirming DIRECTION $ES $SP-or+(1.18)to*2.37* $NQ-or+(2.37)to*4.75*
26 Apr 15 14:32:30
Tier4 $ES $SP-or+9.5to19 $NQ-or+19to38
26 Apr 15 14:32:18
$ES $SP-or+1.18to2.37 $NQ-or+2.37to4.75 Tier2 $ES $SP-or+2.37to4.75 $NQ-or+4.75to9.5 Tier3 $ES $SP-or+4.75to9.5 $NQ-or+9.5to19
Russell Barbour
26 Apr 15 13:14:10
http://t.co/fmOyM2xelz <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $VSR $NQ $SSYS $RGLS $DDD
Ty Reamer
26 Apr 15 12:09:12
$NQ still on watch for 5%+ move for entry
26 Apr 15 11:24:08
$NQ Levels. Daily Bull Bear Zone = 4527/4531 Weeks Bull Bear Zone = 4426/4439 http://t.co/8lEebUYdOz
Mark Trader
26 Apr 15 08:39:11
Cool trading site I just found. https://t.co/T2poBgnyFu $HL $HERO $WLT $MUX $CYTX $OIBR $VG $TC $NQ $UMC
26 Apr 15 08:31:55
$NQ weekly view...see if it can cross 4.32...been coiling a while https://t.co/UWeGcSm3u2 via http://t.co/fJpA614IBv
Mark Trader
26 Apr 15 05:53:42
Cool trading site I just found. https://t.co/T2poBgnyFu $HL $HERO $WLT $MUX $CYTX $OIBR $VG $TC $NQ $UMC
Market Parse
26 Apr 15 00:01:13
@zkouwe Since your tweet was sent $NQ has risen 1.429%. See your featured tweet on Market Parse http://t.co/YHInvBCk4m
Market Parse
26 Apr 15 00:01:13
@ChartLines Since your tweet was sent $NQ has risen 1.429%. See your featured tweet on Market Parse http://t.co/YHInvBCk4m
Market Parse
26 Apr 15 00:01:13
@bluebarontrader Since your tweet was sent $NQ has risen 1.429%. See your featured tweet on Market Parse http://t.co/YHInvBCk4m
  +Follow July 3, 2014 10:53AM



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