Shares of NQ Mobile Inc (ADR) (NYSE:NQ), the Chinese mobile internet service provider, continue to slide as investors are still waiting for the release of its 2013 annual report. Investors are concerned regarding the viability of the firm amid the repeated allegations by Muddy Waters that it is a massive fraud.

NQ Mobile

The shares of NQ Mobile Inc (ADR) (NYSE:NQ) are trading at $7.57 per share, down by more than 2% as of 2 PM ET. Yesterday, the stock dropped more than 15%. The stock price of NQ Mobile is down more than 51% year to date.

NQ Mobile YTD  Stock Chart

Market observers opined that any delay in the financial filings of NQ Mobile Inc (ADR) (NYSE:NQ) will drive more investors to sell their stake in the company given their awareness regarding Muddy Waters’ accusations regarding fraud by overstating its revenue and misrepresenting its cash balances.

Internal investigation

The Chinese mobile internet service provider has repeatedly denied the fraud allegations. NQ Mobile Inc (ADR) (NYSE:NQ) recently released the findings of its internal investigation of its accounting practices showing that no evidence was found that it had committed fraud.

However, Muddy Waters’ Carson Block noted that the investigation team admitted that “there was data significant tampering.” He was referring to the statement in the report that the “investigation team observed indications that some information might be missing” and that the management and staff of the company were unable to provide a credible explanation regarding the observation.

NQ Mobile sells minority stake in NationSky

Earlier this week, NQ Mobile Inc (ADR) (NYSE:NQ) revealed its decision to sell a minority stake in Beijing NationSky Network Technology, its wholly owned subsidiary, to a venture capital firm.

The Chinese mobile internet service provider said Beijing Guorun Qilian Venture Capital Center agreed to acquire a 3.4% stake in NationSky for $18 million, at a pre-money valuation of $500 million or post money valuation of $530 million. NQ Mobile said it will use the proceeds from the sale to expand the core operations of NationSky, research and development, marketing and working capital activities.

Stock rating

The shares of NQ Mobile Inc (ADR) (NYSE:NQ) received a Sell rating with a score of D+ from the TheStreet Ratings team, citing that the company has multiple weaknesses such as deteriorating net income, disappointing return on equity and feeble growth in its earnings per share.