Why NQ Mobile Shares Popped (Again)

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 (NYSE: NQ  ) touched another 52-week high after rising as much as 12% during intraday trading Friday morning following the release of NQ's new Music Radar app. Over the past two trading days, shares of the Chinese mobile Internet services company have risen by as much as 24%.

So what: NQ's Music Radar is a slick solution aimed at addressing China's fast-growing mobile market, so it's easy to understand investors' excitement. The company, for its part, says the app should make "searching for music more accurate and convenient" for Chinese users, who can now not only look for songs through traditional search queries, but also take advantage of its "extremely fast music recognition" technology that can identify melodies even if  they're simply sung of hummed.

In addition, the app provides personalized music recommendations, "on-the-go" music listening and downloading capabilities, and social music sharing features through Simple Notification Service.

Now what: Today's news comes exactly a month after NQ mobile stock rose more than 21% after the company beat earnings expectations, and raised forward guidance. Music Radar should help the company to continue that momentum by further monetizing its growing user base, especially considering NQ says it is also planning to both expand the service to other countries "in the near future," as well as expand its scope to also include radio, video, and TV content applications down the road.

Shares of NQ currently trade at nearly 110 times last year's earnings, so investors should note that they're paying a premium for the stock. However, given the enormous size of China's mobile and wearable computing market, it's certainly not out of the question for NQ to grow into it's lofty valuation.

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Comments from our Foolish Readers

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  • Report this Comment On September 13, 2013, at 6:01 PM, harkvasa wrote:

    Based on what is happening at NQ, in 2013 NQ would earn around $1 per share and then in 2014, it could earn around $1.40 per share. With such growth in earning and in mobile internet space, NQ is trading at under 20 times 2014 earnings.

    NQ is still very cheap, it should get be trading at $40 based on it's earnings and growth prospects and market potential.

  • Report this Comment On September 14, 2013, at 10:37 PM, EGTalbot wrote:

    Another reason for NQ's pop is that on thursday, it hit the buy point of a high tight flag pattern. Whether or not one believes in technical indicators, plenty of the market does, and something like that can certainly impact the share price of a stock with the float and recent earnings than NQ has.

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