NQ Mobile Inc (NYSE:NQ) stock is still witnessing weakness on Tuesday after dropping around 13% in the last trading session. The decline on Monday marked the second straight session of losses for the technology company following the weak fourth quarter earnings reported last week.
No respite for NQ Mobile investors
After touching the $15 level last Friday, NQ Mobile Inc (NYSE:NQ) shares have been going down, and have lost around 30% in the last two trading sessions. On Monday, the volume of shares for the company was 14 million compared to 10.9 million shares on Friday.
On March 4, NQ Mobile stock touched a high of $21.39 as buyers including Oberweis Asset Management Inc. and Toro Investment Partners LP made a comeback, expecting Carson Block’s allegations to be false.
The Chinese mobile-services provider gave a weaker than expected forecast on April 10, which further triggered investor concern. The two day decline is the biggest for the company in five months. The stock is down 52% since short-seller Carson Block publicly alleged that the company is inflating its revenues.
Drop in share price supporting Block’s claim?
After weak first quarter earnings, which missed the analysts’ estimates by a wide margin, Block said in an e-mail that the earnings indicate that the company is a “fraud.”
In his email on April 11, Block wrote, “NQ’s contorted excuses for being unable to generate operating cash flow, and its announcement of yet another highly suspicious acquisition further bear out that it’s a fraud.”
For the first quarter, NQ Mobile Inc (NYSE:NQ) posted earnings of 22 cents a share against the consensus estimate of 32 cents. The Chinese company reported negative cash flow from operations of $2.26 million for 2013 against a positive cash flow of $9.96 million in 2012. According to the company, in a series of deals during 2013 and the first quarter of 2014, it acquired a 58% stake in Tianjin HuaYong Wireless Technology Ltd.
Tim Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC told Bloomberg on April 11, “Certainly it’s a name you need to be wary of, not because of the business itself but because of the onslaught by short-sellers,” and added “A lot of customers just don’t want to deal with this.”
At 9.40 am EDT, NQ Mobile Inc (NYSE:NQ) shares were down 0.09% to $11.01.