Why NQ Mobile, Inc. Stock Popped Today

Is NQ Mobile's jump meaningful? Or just another movement?

Jul 23, 2014 at 3:30PM

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) jumped 20% Wednesday after the Chinese Internet services specialist announced an expanded partnership with A Wireless. Specifically, A Wireless will now make available a comprehensive, bundled security solution from NQ Mobile to subscribers at its more than 200 stores across the U.S. 

So what: According to NQ's press release, the deal "marks the first availability of its Mobile Assurance product for iPhone, while Android users [can now] benefit from the market-leading NQ Mobile Security app."

Perhaps most notably, the news comes as NQ Mobile continues to battle ongoing allegations of fraud, and arrives only a few days after the company questionably replaced its auditor amid a request to expand the scope of its 2013 audit. Now, however, the market appears to be taking A Wireless' seal of approval as a vote of confidence in the viability of NQ Mobile's business.

Now what: With this in mind, however -- and contrary to what some bullish investor have already seemed to imply -- note this isn't a direct partnership between NQ Mobile and Verizon Wireless. Rather, A Wireless is one of the country's largest authorized retailers given the distinction of being a "Verizon Wireless Premium Retailer." Also, remember that A Wireless has long been a point-of-purchase distribution partner for NQ's software products. To borrow NQ's words, "The deal broadens the relationship between NQ Mobile and A Wireless."

In the end, I'll admit NQ Mobile looks tantalizingly cheap trading at around four times next year's estimated earnings. But, while it might be tempting to ride the stock up on any positive catalysts, I've already asserted the risk of a total loss is simply too great for me to ignore. As it stands, expanded partnerships or not, I think prudent investors would be wise to continue to stay far away from NQ Mobile.

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Steve Symington owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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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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