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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
Russell Barbour
20 Sep 14 04:33:52
Wow Super_trades has made over $2 M ILLION in the last year!! check out his chart http://t.co/uBX7WCneox $VIMC $LIVE $NQ $HURC $FB
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20 Sep 14 01:20:03
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4-traders.com
19 Sep 14 22:35:06
NQ Mobile : Releases Data on Current Threat Landscape http://t.co/hYUvRRufkn $NQ
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Wells
19 Sep 14 21:20:32
$WLT on watch for Monday RSI is crazy low. Watch $NQ and $ES for weakness on open. $ACPW bottoming here soon too. Good company.
Jim Harrison
19 Sep 14 20:03:40
Of Interest: $ES $NQ $YM $TF $ZB Blog Post: TheFinancialServicesClub: Maybe it's not so Simple, after all http://t.co/Dj2DCejOJM
Wayne Nguyen
19 Sep 14 19:40:04
$NQ Weekly Chart: Got rejected again in the Red Zone http://t.co/T2NhUqv5JF
Van Dinh
19 Sep 14 18:56:58
RT @RJB_stocks: What constitutes a buyable gap up ? http://t.co/5gYOcRClyw #stocks #trading #nasdaq #nyse $FB $TWTR $YHOO $NQ $YY
Russell Barbour
19 Sep 14 18:25:30
What constitutes a buyable gap up ? http://t.co/5gYOcRClyw #stocks #trading #nasdaq #nyse $FB $TWTR $YHOO $NQ $YY
Stock Signaling
19 Sep 14 18:01:13
Movers and Shakers: $AUXL $NQ $KBH $SUNE $AEO $AMD $ANV $ANR $HDS $CTSH $WB $ZU $IDTI $VNET $FUEL http://t.co/Vtx6dLy0Nw #stocks #investing
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19 Sep 14 16:31:24
Top Stocks (By Trading Liquidity): $BTU $LIVE $NQ $KBH $DATA $SODA $YELP $SALE $ISR $MHR $FUEL $MAR $JDSU $LULU $CTSH http://t.co/Vtx6dLy0Nw
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Patrick
19 Sep 14 16:00:05
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Jim Harrison
19 Sep 14 15:27:19
Of Interest: $ES $NQ $YM $TF $ZB 5 Things To Ponder: The Fed by Lance Roberts of Streettalk Live http://t.co/wmY3aMlDcm
theoptiondon
19 Sep 14 14:34:45
MARKET WRAP 9/19/14 http://t.co/YMXN0bPNqJ $AAPL $AMZN $TWTR $PCLN $BIDU $GOOGL $TSLA $FB $NFLX $LNKD $Z $YHOO $NQ $SPY $FEYE $VRTX $BABA
TheStreetOption
19 Sep 14 14:12:45
$NQ (09/19/2014) http://t.co/Cnxk04RKH2
Jack Trader
19 Sep 14 14:00:50
$NQ NQ Mobile Inc. (NQ) List of Malware Trends [INFOGRAPHIC] http://t.co/Yh5cVIa9n7
Patrick
19 Sep 14 14:00:05
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Mo.Z
19 Sep 14 13:12:34
week review; $gold, and $silver down for the week. $DJIA, $SPX, and $NQ up. $BABA and $YHOO were highlights for today.
Briefing.com
19 Sep 14 13:03:10
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Schnuz
19 Sep 14 12:49:54
Trade $NQ $NQ_F stop hit at 4099.50.
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19 Sep 14 12:18:19
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19 Sep 14 12:00:05
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The Premium Seller
19 Sep 14 11:20:00
http://t.co/x6u9sl9aVX Verified $38.76 profit in $NQ futures scalp
Schnuz
19 Sep 14 10:32:58
Trade $NQ triggered short at 4087.50. Target 4066.00. Stop 4099.50.
Wells
19 Sep 14 10:29:02
$BABA going to fall further as $NQ is turning into the red? Y'all day traders have fun. Ill look at $JD when mkts are finished falling.
Wells
19 Sep 14 10:21:35
dang $BABA doing the IPO limbo. breaking below 90. Watch $JD for a bounce. Id wait and let $NQ and $ES pullback first though.
gunguy
19 Sep 14 10:06:21
A sea of red out there. Was yesterday the top? $ES $NQ Only time will tell.
Jim Harrison
19 Sep 14 10:05:34
Of Interest: $ES $NQ $YM $TF $ZB Implementing Algo Strategies on FPGAs â Part 2 http://t.co/qWMXLsM4kM
Jim Harrison
19 Sep 14 09:30:08
Of Interest: $ES $NQ $YM $TF $ZB The Evolution of Big Data, and Where We're Headed | WIRED http://t.co/3YTPesDzjQ
Jim Harrison
19 Sep 14 09:30:08
Of Interest: $ES $NQ $YM $TF $ZB The Data-Visualization Revolution http://t.co/xld20zbNUO
Jim Harrison
19 Sep 14 09:30:07
Of Interest: $ES $NQ $YM $TF $ZB Three Key Questions About the Slowdown in Emerging Markets - iMFdirect's blog -... http://t.co/FNAMgrvhF6
Jim Harrison
19 Sep 14 09:30:06
Of Interest: $ES $NQ $YM $TF $ZB Making Systematic Risk Disappear, Not - The Aleph Blog's blog - MoneyScience http://t.co/AqZ3Evd7Of
Jim Harrison
19 Sep 14 09:30:05
Of Interest: $ES $NQ $YM $TF $ZB Instability and network effects in innovative markets. (arXiv:1409.3837v1 [phys... http://t.co/FrYPqNWUvk
Jim Harrison
19 Sep 14 09:30:04
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Briefing.com
19 Sep 14 09:03:13
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Patrick
19 Sep 14 08:00:06
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Jeff Greenblatt
19 Sep 14 07:52:11
Once again our explosion resistance technology setup scores big in the $NQ #stockaction http://t.co/6RQY7Oxpvc
Frim Company
19 Sep 14 07:18:27
C'mon $NQ - do something, up or down! don't just sit there like a dead duck!
Stock Signaling
19 Sep 14 07:01:18
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19 Sep 14 06:43:31
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Tweed
19 Sep 14 06:38:08
RT @TraderGoalieOne: The Gap Higher open in the $YM, $NQ and $ES also opened outside the Bollinger Bands.
Robert Dunn
19 Sep 14 06:37:39
The Gap Higher open in the $YM, $NQ and $ES also opened outside the Bollinger Bands.
Zr1Trader
19 Sep 14 06:32:12
RT @TraderGoalieOne: Gap Open higher in the $ES, $YM and the $NQ
Robert Dunn
19 Sep 14 06:31:39
Gap Open higher in the $ES, $YM and the $NQ
OptionCast
19 Sep 14 06:15:19
Short Squeeze Alerts $CSLT $INSY $ESI $WUBA $WLT $NQ $JAKK $BTH $EBIX http://t.co/vRTWxV5Spu
RogerV
19 Sep 14 06:14:03
$NQ Weekly closing focus 4095.00 for continuation...RANGES: Inside 4120/4075.50 momentum loss...Outside 4142.50/4001.50
RogerV
19 Sep 14 06:13:39
$NQ Daily full repair >4073.25; Inside 4117.50*/4103.75 closing;Outside 4124.75 major/4097.00;Outside 2 4129.25-4130.75/4090.00-air-4078.25
				
				
  +Follow July 3, 2014 10:53AM
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