NQ Mobile (NetQin) NQ
Muddy Waters maintains its sub-$1 price target on NQ Mobile after Chinese media reporting confirms that ZTE, Huawei, Lenovo and Coolpad never had the pre-installation partnerships NQ claims.
Thesis
This follow-up note compiles English translations of four Chinese-media articles published Oct 25-30, 2013 that corroborate Muddy Waters' Oct 24 short report alleging fraud at NQ Mobile. Reporters from The Beijing News, Money.163.com, Sina Technology and Caijing News confirm that NQ's claimed pre-installation 'business partners' — ZTE, Huawei, Lenovo and Coolpad — each independently denied any cooperation with NQ; ZTE adds that it repeatedly asked NQ to delete fabricated cooperation announcements from its website. The note also documents NQ shares collapsing 62% (from $23.05 to $8.80) in three trading days, FL Mobile games being pulled from the iOS App Store, CEO Henry Lin's evasive Xueqiu.com Q&A in which he refuses to name any handset model carrying NQ software, and his call to organize an 'Anti-Muddy-Waters Alliance.' Muddy Waters reaffirms its <$1 target.
SCQA
NQ Mobile (NYSE: NQ) is a US-listed Chinese mobile-security software company that claims roughly 55% China market share, ~6 million paid users, and pre-installation deals with ZTE, Huawei, Lenovo and Coolpad to validate its growth story.
Following Muddy Waters' Oct 24 report alleging 72% of NQ's China security revenue is fabricated, all four named handset OEMs publicly deny any pre-installation cooperation with NQ, and ZTE says NQ ignored repeated takedown requests for false partnership announcements.
Muddy Waters maintains its short and tells investors to weigh independent Chinese-media corroboration against NQ's evasive press conferences, unfilled promises of a 'strong reply,' and CEO Lin's proposed 'Anti-Muddy-Waters Alliance' deflection.
Reaffirmed <$1 price target implies ~90% further downside from the post-report $8.80 close and ~96% downside from the pre-report $23.05 level, framed as fraud-driven equity wipeout.
The three reasons
- 1
ZTE, Huawei, Lenovo and Coolpad each deny any pre-installation cooperation with NQ
- 2
NQ stock fell 62% in three trading days yet management still owes a 'strong reply'
- 3
CEO Lin avoids naming any handset model that ships with NQ software
Primary demands
- Maintain <$1 price target on NQ Mobile
- Treat NQ's claimed handset-OEM pre-installation partnerships as fabricated
- Discount NQ's promised 'strong reply' and management Q&A as evasive non-answers
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (2)
Notes
Short follow-up to Muddy Waters' Oct 24, 2013 81-page initial NQ Mobile fraud report. Format is a Word-style document with no charts, slides, or branding beyond the small Muddy Waters logo on the cover; the body is English translations of four Chinese-media pieces (Beijing News, Money.163.com, Sina Tech, Caijing News) plus a verbatim Xueqiu.com Q&A with CEO Henry Lin. Rhetorical strategy is corroboration-by-third-party rather than new primary research: lets independent OEM denials do the accusing. CEO-quote contradictions are abundant (Lin promising a 'strong reply' that never comes, refusing to name a single handset model carrying NQ software, threatening lawsuits in three jurisdictions, calling for an 'Anti-Muddy-Waters Alliance'). No stake disclosed beyond the standard short-position TOS boilerplate on p.1.