Chinese mobile service security firm NQ Mobile declined to its lowest level after the company was called a 'massive fraud' by Muddy Watters LLC. Muddy Waters is a research firm established by Carson Block.
The share values of NQ Mobile dropped by as much as 63% to trade at USD8.46 per share in New York. It was the lowest value of the stock until trading was suspended. Before yesterday, the stocks were valued at 279% its latest value.
Muddy Waters started off NQ Mobile with a strong sell rating. After further review, it found that NQ had inflated its sales figures. Under the leadership of co-CEO Omar Khan, former Samsung Electronics Chief Strategy Officer, raised its 2013 revenues estimate last August 12 to USD188 million, above its previous maximum revenue estimate bandwidth of USD184 million. As such, the company's second quarter profit report had doubled.
According to an email report from Carson Block to his clients, "We believe it is a zero. At least 72% of NQ's purported 2012 China security revenue is fictitious."
For its part, NQ Mobile rejected the allegations, with a statement that the company would respond with further details before the opening of the markets tomorrow.
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