NQ Mobile Inc Stock Driven By Speculation: Toro Partners

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NQ Mobile Inc Stock Driven By Speculation: Toro Partners

NQ Mobile Inc (ADR) (NYSE:NQ) shares have been witnessing a sharp decline this week. Toro Investment Partners, a holder in NQ Mobile, believes that the recent drop in the share price could be largely attributed to the speculation surrounding the company, and the fundamentals have nothing to with it, says a report from Bloomberg.

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Speculation driving the share price down

Toro Investment Partners CIO Taek-Geun Kwon, said, “It is all driven by speculation that the company’s special committee investigation is not going well. It has nothing to do with the company’s fundamentals.”

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According to Kwon, NQ Mobile’s is one of the few companies to release quarterly results prior to releasing its audited annual report, which reflects the confidence of the company. For the first quarter, the tech company posted profitable numbers and positive cash flow ahead of unrelated charges.

NQ Mobile Inc (ADR) (NYSE:NQ) will have to submit its audited 20-F report 20-F report, and Kwon believes the company will be able to meet the deadline.

According to the last filing by Toro, the hedge fund held around 1.77 million shares or 3.5 percent of NQ’s stock and since then has acquired a small amount of shares, according to Kwon.

NQ Mobile confident on growth prospects

On Tuesday, analysts at the TheStreet Ratings lowered the rating on NQ Mobile Inc (ADR) (NYSE:NQ) from Hold to Sell citing weakness in multiple areas including net income, return on equity and struggling growth in its earnings per share. On the basis of the change in net income compared to the same quarter last year, NQ Mobile lags well behind the S&P 500 and the Software industry. Net income for the quarter has dropped significantly by 206.8% from $4.87 million to -$5.20 million, last year.

In a blog post Tuesday, NQ Mobile Inc (ADR) (NYSE:NQ) termed the massive sell-off in its stock “unacceptable and ridiculous.” The management said that it came up with 10b-5 trading plan in the fourth quarter open trading window, and in line with the plan has been actively buying the stock, in the open market. “We are also continuing to consider other things as we deem this most recent selloff entirely unacceptable and ridiculous.”

Management has expressed confidence on the company’s business, financials, strategic positioning and on the future. “We believe this extreme volatility will prove short lived,” the statement said.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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