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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
Jim Harrison
2 Oct 14 05:05:50
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheAlephBlog: Possible Bond ETF Problems http://t.co/KfDg2FUIMq
Ariel
2 Oct 14 04:44:46
RT @RVchartchatter: $NQ 60min same 2xer against 3970.00; inside 3990.50/3970.00; outside 3998.50/3958.50
RogerV
2 Oct 14 04:03:54
$NQ 60min same 2xer against 3970.00; inside 3990.50/3970.00; outside 3998.50/3958.50
ابو عبدالله
2 Oct 14 03:28:20
RT @Wayne0708: $NQ Tomorrow price likely to open higher to 6.8s then head down to retest low 6.54, then VERY LIKELY will make lower low.
Ciscohitt
2 Oct 14 03:07:47
$NQ Levels. http://t.co/4Ax7M8vZn9
Jim Harrison
2 Oct 14 02:58:07
Of Interest: $ES $NQ $YM $TF $ZB European Spreadsheet Risks Interest Group - spreadsheet risk management and sol... http://t.co/rnzGkiEBcw
Edel Gonzalez
2 Oct 14 02:41:34
Adding some $NLNK to the portafolio and increasing $NQ
flare9x
2 Oct 14 00:37:02
Short sellers executed positions today,like all trends they all look the same at the beginning but no one knows just how big they can be $nq
Jim Harrison
1 Oct 14 18:47:05
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: A Systemic Stress Test Model in Bank-Asset Networks. (arX... http://t.co/rLyu0ayfUR
Jim Harrison
1 Oct 14 18:47:04
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: The Fourier estimation method with positive semi-definite... http://t.co/TZVuRDvp1V
Jim Harrison
1 Oct 14 18:47:03
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: Systemic Interbank Network Risks in Russia. (arXiv:1410.0... http://t.co/FRExpJgyic
Jim Harrison
1 Oct 14 18:47:01
Of Interest: $ES $NQ $YM $TF $ZB Published / Preprint: On the convergence of the Fitness-Complexity Algorithm. (... http://t.co/xeA65M79pN
Wayne Nguyen
1 Oct 14 18:28:32
$NQ Tomorrow price likely to open higher to 6.8s then head down to retest low 6.54, then VERY LIKELY will make lower low.
Jim Harrison
1 Oct 14 17:42:49
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheFinancialServicesClub: We are not being disrupted, just rearchite... http://t.co/sRrch6zOat
theoptiondon
1 Oct 14 16:01:54
MARKET WRAP 10/1/14 http://t.co/RJGfymNPw7 $AAPL $AMZN $TWTR $PCLN $BIDU $GOOGL $TSLA $FB $NFLX $LNKD $AGIO $YHOO $NQ $SPY $TKMR $VRTX
ابو عبدالله
1 Oct 14 15:32:37
RT @Wayne0708: $NQ Getting close to where I want it to be. Hopefully tomorrow is when I can put in a buy order
SteelHedge
1 Oct 14 15:29:51
$NQ Trade Example http://t.co/YthODIaXXX
Dave Kelly
1 Oct 14 14:25:51
$NQ He's still alive, everyone. “@NQMobileIR: Read the latest from @mobileomar on #cyber #security and #NCSAM http://t.co/yL8ausKDJ8”
Stan
1 Oct 14 13:20:15
Today's move confirms setup so far from previous tweet. Way to go. $NQ $ES
Zachary Prensky
1 Oct 14 13:20:02
@SludgeReports I like $NQ as well. Too many smart mainland Chinese funds buying here for it not to have value. Same with $MOBI
Wayne Nguyen
1 Oct 14 13:09:55
$NQ Getting close to where I want it to be. Hopefully tomorrow is when I can put in a buy order
Brian Tesch
1 Oct 14 13:09:45
$NQ Too tempting... Added a few more shares....
Alan Farley
1 Oct 14 13:00:54
That day was $QQQ $NQ top tick.
Van Dinh
1 Oct 14 12:59:28
RT @BreakoutStocks: New breakouts for $AA, $MOVE, $EBAY, $NQ http://t.co/WHy8M8KjIc
Van Dinh
1 Oct 14 12:59:23
RT @Briefingcom: Get a 5-week view of upcoming #earnings reports http://t.co/eJaNlOxtzs $CALM $WAG $AZZ $STZ $TCS $YUM $MON $PEP $NQ $INFY
Van Dinh
1 Oct 14 12:59:18
RT @msttrader: Nasdaq-100 $QQQ $NQ under 50-day EMA. Hasn't closed under that level since May 15th.
Van Dinh
1 Oct 14 12:59:10
RT @SkevaBoy: $AAPL $FB $TSLA $FEYE $NQ $FAS Buying opportunity
Van Dinh
1 Oct 14 12:59:03
RT @SludgeReports: $NQ got an email, YES I'm long NQ & not pumping 4 a trade. Shorts accusing in diff forums. I'm busy playing RTRX bounc…
Van Dinh
1 Oct 14 12:58:53
RT @RJB_stocks: Check out my biggest winning trade ever! http://t.co/vzvvRrplzW $BLMN $JACK $RLGT $TTPH $PSFW $MXC $CDZI $HURC $JACK $IKNX …
Sludge Reports
1 Oct 14 12:58:12
$NQ got an email, YES I'm long NQ & not pumping 4 a trade. Shorts accusing in diff forums. I'm busy playing RTRX bounce fr $8. l8tr
Ciscohitt
1 Oct 14 12:35:05
$NQ finding supp @ Daily just above a weekly zone for now. http://t.co/CkkVjkzNZ3
Russell Barbour
1 Oct 14 12:32:34
Check out my biggest winning trade ever! http://t.co/vzvvRrplzW $BLMN $JACK $RLGT $TTPH $PSFW $MXC $CDZI $HURC $JACK $IKNX $NQ
RogerV
1 Oct 14 12:11:10
$NQ 60min busts the 3989.50 next ledge working 3962.75-3958.00 with secondary 3950.25-3947.75 to open3923.00 8/13 breakout acceleration
Jim Harrison
1 Oct 14 12:06:52
Of Interest: $ES $NQ $YM $TF $ZB What really is High Frequency Trading? - Traders Magazine http://t.co/FZtUenuXJg
DA_BARRON
1 Oct 14 11:47:46
-62 on $NQ & $COMP targets have been met
PennyStock Zone
1 Oct 14 11:25:02
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Wells
1 Oct 14 11:23:34
$NQ $ES pros will catch the bottom before you. Trying.
Kenny Wolf
1 Oct 14 11:15:06
RT @SkevaBoy: $AAPL $FB $TSLA $FEYE $NQ $FAS Buying opportunity
Russell Barbour
1 Oct 14 11:12:09
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Skevaboy
1 Oct 14 11:11:30
$AAPL $FB $TSLA $FEYE $NQ $FAS Buying opportunity
ابو عبدالله
1 Oct 14 10:59:39
RT @Wayne0708: $NQ broad market selling off. gotta be cautious here
Wayne Nguyen
1 Oct 14 10:57:44
$NQ broad market selling off. gotta be cautious here
Zvi Friedman
1 Oct 14 10:25:20
@TraderGoalieOne $YM and $NQ daily gap fills and $ES weekly back to mean.
Victor Zubarev
1 Oct 14 10:23:01
W D #Gann #SQ9 Intraday $ES_F S< 1958, tgts 1953,1947,1936, 1925 $NQ_F S< 4032, tgts 4024, 4016, 4000, 3984 Just hit the 4th $NQ tgt 3984
Alan Farley
1 Oct 14 10:07:08
Nasdaq-100 $QQQ $NQ under 50-day EMA. Hasn't closed under that level since May 15th.
BlockTradeAlert
1 Oct 14 09:36:07
BLOCK TRADE: $NQ 760,000 shares @ $6.69 [12:36:06]
PennyStock Zone
1 Oct 14 09:23:36
$4,911 profit verified here: http://t.co/pjklR5ae0H thanks to Super_Trades for the alert! $xgti $saex $ptnt $rcon $lbix $NQ $YY $GALT
Russell Barbour
1 Oct 14 09:02:21
Wow Super_trades has made over $2 M ILLION in the last year!! check out his chart http://t.co/EfuNMUT9XP $VIMC $LIVE $NQ $HURC $FB
Jim Harrison
1 Oct 14 08:51:00
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheFinancialServicesClub: Basel breakfast to start the day? [#SIBOS] http://t.co/tUa8eiuo7I
PennyStock Zone
1 Oct 14 08:43:36
(Stock picking service Review): Timothy Sykes Penny Stocking Silver Alerts: http://t.co/kj7b1fsTWt $WATT $NETE $NQ $CNET $YY #daytrading
				
				
  +Follow July 3, 2014 10:53AM
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