NQ Mobile Inc (ADR)(NYSE:NQ) Shares Sink

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Shares of China’s NQ Mobile Inc (ADR)(NYSE:NQ) are sinking after the company reported lower than expected fourth quarter earnings per share and said that it had identified an accounting error. NQ Mobile provides mobile Internet services focused on security, privacy and productivity.

NQ Mobile Inc (ADR)(NYSE:NQ) reported fourth quarter EPS of 22c, excluding certain items, compared with analysts’ consensus estimate of 32c. The company’s revenue, however, came in slightly higher than expected, and it raised its full-year revenue guidance slightly. The company also disclosed that it had identified an overstatement relating to share-based compensation for the three month and nine month period ended last September 30. The overstatement was caused by calculation errors, the company stated.

Last October, short selling research firm Muddy Waters accused NQ Mobile of being “a massive fraud.” NQ’s largest customer is really itself, and it massively overstates its market share and user base, Muddy Waters alleged at the time.

In a note to investors earlier today, Macquarie analyst Jiong Shao wrote that the company’s fourth quarter results were “solid.” The company has made new deals with organizations in the healthcare sector and its growing user base has enabled its ad revenue to surge, Shao stated. Deloitte should release the results of its independent audit of NQ on time, added Shao, who kept a $26 price target and Outperform rating on the stock.

In late morning trading, NQ Mobile Inc (ADR)(NYSE:NQ) tumbled $2.30, or 14.38%, to $13.69.

 

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