NEW YORK (TheStreet) -- NQ Mobile's (NQ) earnings poured accelerant on the negative sentiment engulfing young tech companies. The Chinese mobile security software and entertainment provider missed consensus EPS estimates by a wide margin. Shares fell nearly 8.7% after-hours, adding to a 4.7% drop earlier in the day.
On StockTwits.com, however, investors remained largely bullish on the company. They called for shares to rebound after a conference call that focused on the company's 126% sales growth, compared to the same period a year ago. Sentiment was 89% bullish, despite the sell off.
NQ Mobile reported $0.22 EPS for the fiscal fourth quarter, a whopping ten cents less than consensus estimates, according to the Analyst Ratings Network. Sales of $67.9 million came in about five million higher than anticipated. During the conference call, management focused on the sales growth, new revenue streams, such as advertising, and user growth. NQ said it brought in $16.7 million in advertising during the last three months of the year compared to $8 million in the same period in 2012.
$NQ notes they have 1,000 advertisers on their platform - Brian Bolan (@bbolan1) Apr. 10 at 08:36 PM
$NQ just going to through this out there... that ad spend per advertiser is magnificently high if true. - Brian Bolan (@bbolan1) Apr. 10 at 08:38 PMNQ Management also set guidance above consensus expectations. The company expects net revenues to be between $75 million and $76 million for the first quarter of 2014. It raised full year 2014 net revenue guidance fifteen million on both ends to $320 million to $325 million. Analysts had expected about $293.9 million.
$NQ "revenue trajectory is well ahead of even our own expectations..." - bklynchris (@bklynchris) Apr. 10 at 08:15 PMAfter-hours bears focused on the earnings shortfall, as well as an accounting error and concerns about a coming report aimed at rebutting a short seller's claims that much of NQ's business is fictitious. In its earnings release, management revealed "an accounting overstatement" related to share based compensation expense for the last two quarters. The error, as bullish StockTwits' commentators noted, actually positively impacted investors as it overstated administrative expenses and, correspondingly, the reported GAAP net loss, according to the earnings release.
@accounts Now look at the $300,000 accounting mistake.It actually ended up being a positive mistake (they listed as expense which it wasn't) - Sanai (@Sanai) Apr. 10 at 07:01 PMHowever, investors worried that the accounting errors were indicative of sloppy work that might give credence to short seller Muddy Waters' claims that the business is largely a fraud.
$NQ MUDDY WATER IS BACK ;) - Matt Nowicki (@TWTRbull) Apr. 10 at 07:35 PMMuddy Waters, a firm run by Carson Block, first raised its allegations in October. The stock fell 65% in the days after. It has since climbed more than 90% from its October 28th low.
"@mikelo22: "@danielvito: $NQ $283 million in cash!" Block will tell you that none of that cash exists." and many will believe, lemmings - John Doe (@bullish100) Apr. 10 at 08:48 PMIn the earnings release, management reiterated that it had formed a special committee to investigate the claims and had retained Deloitte & Touche to conduct a review. The committee will report its results in conjunction with the filing of its annual report. Some StockTwits' investors said the uncertainty related to the committee report would keep the stock from responding positively to any good news in earnings.
Sadly none of the CC matters...people just want to see the audit and committee findings...$NQ - SR5 Group (@SR5Group) Apr. 10 at 08:24 PMBut most StockTwits' investors expect the report to exonerate the company.
$nq looks like good growth ahead. Audit will come back clean. Gonna have some trouble with market headwinds, but should do ok - joshua (@clt83) Apr. 10 at 08:42 PM
$NQ would love to see an attorney take on contingency lawsuit against CB suing for company losses incurred and legal costs of suit. - Michael Schamberg (@mjsfinancial) Apr. 10 at 08:45 PMAt the time of publication the author had no position in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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