Why China Mobile Games & Entertainment Group Shares Plummeted

Is China Mobile Games' drop meaningful? Or just another movement?

Jun 20, 2014 at 1:06PM

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 China Mobile Games & Entertainment Group Ltd (NASDAQ:CMGE) plunged by as much as 25% Thursday, and remain halted Friday morning after the company reportedly removed nine executives allegedly involved in bribery within its game publishing business. According to a Sina Tech report, that includes China Games president Ying Shuling. 

So what: A press release from The NASDAQ OMX Group stated it halted shares of China Games around 2:50 p.m. Eastern time Thursday, citing "additional information requested" from the company. The release went on to insist "Trading will remain halted until China Mobile Games & Entertainment Group Ltd. has fully satisfied NASDAQ's request for additional information."

Now what: Just over a month ago, the market was happy with China Mobile Games after it reported solid unaudited first quarter results. Now, the company has plenty of work to do in rebuilding its rapport with investors. At the same time, I suppose kudos are in order if it did oust the nine implicated executives for engaging in bribery. But this also begs the question of just how pervasive China Mobile Games' scandal really was. For now, and until the matter is fully resolved, I'm content watching this one from the sidelines.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Sina. The Motley Fool owns shares of Sina. 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.

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Jun 12, 2015 at 5:01PM

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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