NetQin Mobile Inc. (NYSE:NQ) Sheds 57% Last Week

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Dallas, Texas 10/28/2013 (Financialstrend) – NetQin Mobile Inc. (NYSE:NQ) is an application software maker.  The last two days of trading in the previous week were tumultuous days for the company. It all started to unravel on October 24 when rating agency Muddy Waters had gone ahead and termed the operations of the company is bordering on fraud. It advised its clients to strongly sell the stock and went on to quote a PT of less than $1 on the stock. Readers should note that the stock was trading at $10.63 even after the heavy selling the stock has seen over the past few trading sessions.

The blood bath of the stock is centred on the rating agencies claim that the software maker had made fraudulently exaggerated revenue numbers in FY12. It had pegged the overstatement by more than 72%. It had gone on to allege that close to $20.2 million of the $32.2 million revenue that the security software firm had announced from operations in FY12 had been traced back to a shell company called Yidatong. (It is being claimed that Yidatong is a fake company and does not exist)

The rating agency has taken an investigative approach to track down the operations of this firm and has gone on to make assertions that security software maker for mobiles does not have any bono-fide “third-party payments channel” as was being fraudulently being claimed.

On the publishing of the report, the stock had tanked close to 51% whipping off its market valuation by half in a matter of one day. The dramatic fall caused the trading of the stock to be halted by NYSE.

When trading resumed on October 25, the stock managed to post slight fight back before conceding and losing more than 12% of its value in the second half of trading on Friday. When trading ended the stock had plummeted to $10.63 per share with 31 million shares getting sold across the counter as against a 4.3 million daily trading average.

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