NQ Mobile Security Offering Boosts Stock

Jul.23.14 | About: NQ Mobile (NQ)

By Paul Shea

It has been a good week for investors who hold stock in NQ Mobile (NYSE:NQ). The company's shares have added more than 44% in the last five days of trading, and today's 18% boost in value suggests that Wall Street's impression of the company is going to stay good, at least for the rest of today. The company's huge rise in value on today's market resulted from an announcement of a partnership focusing on mobile security solutions.

NQ Mobile deal looks good to market

According to a release from the NQ Mobile's publicity department, the company has a deal with A Wireless, a large-scale wireless retail outfit. The security solution includes NQ Mobile device security software alongside an A Wireless physical device insurance package. The COO of A Wireless said, "By partnering with NQ Mobile, we're able to offer a package that acknowledges the combined value of a device and its contents and keeps our subscribers safe from what could be catastrophic loss."

NQ Mobile Managing Director for the Americas Chris Stier said, "By making a bundled package that comprehensively safeguards devices and data, A Wireless is taking a strong stance against theft and other threats such as malware." The NQ Mobile security package has not looked all that well in recent months, and the company's stock price, and investors, have suffered significantly as a result.

NQ Mobile business announcements have not caused its prolonged stock market stagnation. The machinations of one investor, who believes the company to be involved in fraud, and the actions of management itself have resulted in the problems that resulted in today's announcement being greeted so warmly.

Short NQ Mobile looks tough

NQ Mobile may be the second most difficult company to be short right now. The company's high profile defense against serial short seller Muddy Waters has defined movements in its stock price so far in 2014, and it's only now that the company appears to be convincing investors that its business is worth betting on despite claims that it is a "massive fraud."

Those claims were first made in October of 2013, when the firm's shares were trading at close to $25 per share. On today's market, accounting for the massive rise in value, the company's stock is trading at around $6.30. Those that got in and out of the short at the right time may still look good, but that's true of just about any position taken in the market.

Muddy Waters said that NQ Mobile was involved in several instances of alleged fraud over the last number of years. The company has still not filed a 20-F for the year ending December 2013 because of complications relating to an audit. The delay of that report has resulted in a prolonged low in the company's share price that caused an almost continual decline until this week.

This new deal gives some legitimacy to the NQ Mobile software package, and it certainly gives the market hope of a recovery, but the firm's shares are nowhere near back to where they were before Muddy Waters made its claims.

Disclosure: None.

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