I have been long NQ Mobile (NYSE:NQ) since $6ish and loaded up on the calls on Friday. Here's why....
First, I didn't bother to read the Muddy Waters (MW) report, but I read the news reports/saw the interviews/etc to get an idea of what the hubub was all about.
#1. MW says NQ is a fraud with no cash. All I know is that NQ investors include Sequoia Capital, SAC Capital, Atlantis Capital (?, the Hong Kong firm), and last week... Morgan Stanley+Deutsche Bank did a $172 million convertible bond deal for NQ.
So... NQ somehow fooled all the above firms along with the SEC and PWC this whole time?
I highly doubt it. (could be wrong).
#2. MW says Omar Khan is some puppet CEO. Yeah, okay.... the guy leaves top jobs at Samsung and Citibank to go engage in massive fraud and destroy his career... makes sense?
#3. MW says they surveyed 800 people in China and no one used NQ apps. Gee, great... they asked 800 people out of 1 billion and somehow this is a relevant sample size?
#4. I'm not an accountant, but most deals in the mobile advertising space anyways are net 30-90 days for receipt of revenues... so, I have no issue with Level 1 versus Level 2 cash assuming it's there. Most deals in that world are not paid immediately... payment is 30-90 days "always"... it's not a grocery store.
#5. NQ has deals with mobile operators/etc all over the world.... not a peep from them to back up MW to my knowledge.
So... in the end, I see nothing to worry about at all. I see a guy called Carson Block, who has been quietly making noise about shorting NQ for months I think.... so, he probably was short, was underwater, and in desperation released the report in hopes of covering?
I know nothing, but the above is my analysis and why I loaded up on calls on Friday... because my expectation is for this to blow over and soon enough... NQ will be right back on track and trading much higher than $10 and change or whatever it is now. Good Luck to all
Disclosure: I am long NQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.