NQ Mobile Still Floundering Years After Muddy Waters' Sell Callby
Stock has fallen more than 80% from October 2013 peak
Chairman announced $101 million buyback plan this week
NQ Mobile Inc., the Chinese mobile-security company that has shed almost two-thirds of its market value in the past two years, can’t seem to catch up with the market.
The company’s U.S.-traded shares got beaten up after short-seller Carson Block’s research firm, Muddy Waters LLC, claimed in October 2013 that it had misrepresented cash balances and fabricated revenue. NQ Mobile denied the allegations, went through several management shakeups and tried to prop up the stock with buybacks since then. It still hasn’t recovered.
NQ Mobile has fallen more than 80 percent from its peak in October 2013 and today sells for about $4.60, a little more than half its five-year average price. It has consistently lagged behind the average performance of stocks in the Bloomberg China-U.S. Equity Index for more than two years.
The Beijing-based company said this week that it plans to sell shares to Chairman and Co-Founder Vincent Wenyong Shi for about $101 million in cash. The purchase price of $5.25 per American deposit share represents a 31.6 percent premium of NQ’s average closing price for the past 30 trading days. Shi also said he will purchase a 22 percent stake in NQ Mobile’s subsidiary, FL Mobile Inc., after the proposed buyer failed to proceed with the deal.