Omar Khan, co-CEO of Chinese company NQ Mobile, was just on Bloomberg TV refuting investment firm Muddy Waters’ accusation that his company is a fraud.
Yesterday, when Muddy Waters announced their position, NQ stock fell 57% and had to be halted. It’s trading again as of this afternoon, and the stock’s down around 7.6%.
Muddy Waters CEO Carson Block says NQ’s reaction is right out of the “standard fraud playbook.”
Kahn, on the phone with Bloomberg TV, said he was very busy “responding to this nonsense.” The company “transparently and openly” addressed the issue on a call with investors this morning. He added that Block doesn’t understand his business.
Which actually, is exactly what Block said he would say in his interview with Bloomberg TV earlier today.
“We have 8 years of experience in our industry. We were the pioneers of our industry… we are one of the largest operators of mobile games in China,” said Kahn. He also said that his company monetizes by connecting users with advertisers.
Carson Block says that the company has 250,000 users in China. Kahn says the number is 6 million.
Block also says that NQ recognises revenue that doesn’t necessarily exist. Kahn says that “we actually take a very conservative policy when recognising net revenue,” though it varies based on contracts.
According to Kahn, three separate investment banks have verified NQ’s cash and the company “welcomes” Carson Block to talk to them about their numbers — something he hasn’t done. They want to be transparent.
We know what Block would say to that.
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