NQ Mobile Inc (ADR) (NYSE:NQ) has had a brutally difficult year, going from a market favorite with a stock price of $25 and rising in October, to the target of an extended short campaign from Carson Block’s Muddy Waters Research. In an email that was obtained by ValueWalk, NQ Mobile CEO Omar Khan tells the company’s employees that the worst has passed and that he believes the company will be stronger for the ordeal.
“Stronger today than I have ever been,” says NQ Mobile CEO Khan
“I can personally attest that this has been the toughest 8 months of my professional career. The saying that ‘whatever doesn’t kill you, makes you stronger’ certainly applies here. I am stronger today than I have ever been. I am more resolute today than I have ever been,” writes Khan.
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A lot of the memo reads like a pep talk, detailing the company’s strengths, its successes, and why Khan is as proud to be at the company as when he first took the helm. After months of intense scrutiny, it’s understandable if the corporate culture is in need of a boost, and Khan directly addresses the short campaign behind that scrutiny.
Khan wasn’t prepared for “malicious short-seller attacks”
“The one thing that I was honestly not acutely prepared for, were the malicious short-seller attacks on and fabrications about our company, our partners and our people. I underestimated the lengths that they would go to further their agenda of profiting by doing harm to our company, employees, partners and our shareholders. One of the challenges that comes with globalizing a Chinese company is that these short-sellers have developed a playbook of how to instill fear in the markets by disseminating misinformation at a breakneck volume and velocity,” Khan wrote.
Khan is referring to Muddy Waters’ history of shorting Chinese firms that have listed in Western markets. Critics of the NQ Mobile Inc (ADR) (NYSE:NQ) short have accused Muddy Waters of playing on past successes by making familiar accusations and profiting from the confusion. Block maintains that the company is a fraud, and the company’s stock price ($7.43, down 6.42% today) shows that the market hasn’t made up its mind one way or the other.
“Now that the allegations of fraud by the various short sellers have been dispelled by the work of some of the world’s finest independent investigation teams, we can focus the discussion back on our business,” writes Khan.
He says that NQ Mobile Inc (ADR) (NYSE:NQ) may not be a perfect company and that it will put the recommendations of the Special Committee into effect (while working to complete its 2013 annual audit), but he sees the fraud accusations as yesterday’s news and wants the company to move on.
The full memo is embedded below