{ "docId": "019dd923-622c-750b-8b96-2fbe642fbf78", "docSlug": "69cc18cfe079", "documentTitle": "NQ Mobile (NQ)", "authorId": "51_Muddy_Waters", "authorName": "Carson C. Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2013-10-24 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 25, "pageCount": 81, "prevPage": 24, "nextPage": 26, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 6, "notes": "This is a text-heavy research note page from a short-seller report (Muddy Waters). It uses a 'preempt_rebuttal' strategy to defend its survey methodology.", "elementsJson": [ "headline_text", "paragraph", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-2fbe642fbf78/25", "deckHref": "/decks/019dd923-622c-750b-8b96-2fbe642fbf78", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-2fbe642fbf78.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-2fbe642fbf78#slide-25", "components": [ { "bbox": null, "kind": "callout", "text": "Muddy Waters’s survey-based market research estimates that NQ’s actual share of the China security app market is 1.4%, versus NQ’s purported approximate share of approximately 55%.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0935-737e-8dc8-ac59d5d64f4b", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "market share: 1.4%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-0935-737e-8dc8-b42077100c0d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.8, "x": 0.1, "y": 0.18 }, "kind": "paragraph", "text": "Muddy Waters’s survey-based market research estimates that NQ’s actual share of the China security app market is 1.4%, versus NQ’s purported approximate share of approximately 55%. Based on our research, we estimate that NQ has fewer than 250,000 paying customers in China, versus its claim of six million.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0048c73b-2197-47d4-a417-1d94b787a176", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.8, "x": 0.1, "y": 0.58 }, "kind": "paragraph", "text": "NQ might criticize our survey sample as being too small to be significant; however, this sample size is large enough to reject with 95% confidence a null hypothesis of NQ’s market share being far, far lower than NQ claims. The key is the massive delta between what NQ claims and what we found. There is no way to bridge that gap.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bebdb4c1-6077-4987-b054-04c4e172da78", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.8, "x": 0.1, "y": 0.7 }, "kind": "paragraph", "text": "NQ might criticize our survey sample as being geographically flawed... Moreover, NQ has refused to disclose any information on where in China it actually has market share. (Transparency is the enemy of fraud.)", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e9c73e83-69fd-415e-870f-15dd2a6b33c3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.8, "x": 0.1, "y": 0.35 }, "kind": "paragraph", "text": "Our research shows that NQ’s China market share claims of approximately 55% are ludicrous, as are its claims of having approximately six million paying users. Our surveys of over 800 respondents from five cities show that NQ’s share of the China mobile security app market is only 1.4%. In contrast, Qihoo 360 Technology Co. Ltd. (NASDAQ: QIHU) has 73.5% market share in our survey, followed by Tencent Holding Ltd. (HK: 700) at 15.7%, Kingsoft Corp. Ltd. (HK: 3888) at 4.9%, and “other” at 3.8%.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f4e154da-07db-4665-a64e-090a9a26e425", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "(Transparency is the enemy of fraud.) — Muddy Waters", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0935-737e-8dc8-b39b021c1954", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.2, "x": 0.1, "y": 0.88 }, "kind": "source-note", "text": "43 QIHU 2012 20-F, p. 27. 44 Q2 2013.", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "43ddbb16-7a5e-43d9-b374-083fa7f2c808", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.8, "x": 0.1, "y": 0.09 }, "kind": "title", "text": "NQ is an Obscure Company in China with Minimal Brand Recognition; Our Research Estimates that Fewer than 1.5% of Smart Phone Owners Presently have a NQ Security App.", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d88da7ce-fb77-4f30-b02f-941a3e936ee0", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "preempt_rebuttal", "slug": null, "matchId": "28553a64-2e6c-450a-8162-25f5b01ff3c9", "evidence": "The text explicitly anticipates and refutes two potential criticisms: sample size and geographic bias.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }