Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of NQ Mobile plummeted by as much as 37% early Thursday after the Chinese Internet services specialist announced its independent auditors have requested to expand the scope of that audit. NQ also announced changes to its board of directors.
So what: Just yesterday, shares of NQ Mobile briefly skyrocketed following what turned out to be unfounded rumors the company -- which is fighting allegations of fraud originally leveled late last year from noted short-seller Muddy Waters -- was close to filing its long-overdue annual report.
This morning, however, NQ stated its independent auditor has "communicated [...] that it would need to perform additional procedures and expand the scope of its 2013 audit work." The request, NQ says, came sometime after the June 4, 2014, release of its summary findings of the independent investigation. In that summary, NQ insisted no evidence of such fraud was found.
Now what: Curiously, NQ Mobile says it's only "considering" the auditor's request, and will "provide a further update when available." What's more, the audit update was buried in a single paragraph at the bottom of NQ's lengthy press release, which first justified a shake-up in NQ's board of directors and audit committee. Most notably, NQ's current chair of the audit committee informed the board she would be stepping down "due to personal reasons not related to her role at the company effective on July 6, 2014."
Multiple red flags in recent months already had me doubting NQ would receive an unqualified audit opinion, so I just couldn't bring myself to get behind the stock. Today's news, however, has me fully convinced investors would be wise to stay as far as possible away from NQ Mobile.
Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.
The article Why NQ Mobile Inc. Stock Plummeted Today originally appeared on Fool.com.Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.