Why NQ Mobile, Synnex, and Weibo Tumbled Today
The stock market celebrated the July 4 holiday a day early on Thursday, with the S&P 500 hitting another all-time record and the Dow Jones Industrial Average closing above 17,000 for the first time ever. The advance was broad-based, with most industries seeing positive benefits from the rosy picture of the U.S. economy going forward. Yet a few stocks got left out of the parade higher today, with NQ Mobile , Synnex , and Weibo among the worst performers in the market on a holiday-shortened session.
NQ Mobile plunged 32% after the Chinese provider of mobile-Internet services announced news on multiple fronts that gave investors pause. Most troubling was an update on its 2013 annual audit, in which NQ Mobile revealed that independent auditor PricewaterhouseCoopers Zhong Tian said that it will need to do more work and expand the scope of the audit. Surprisingly, NQ Mobile took the PwC statement as a request rather than a necessity, making some worry that the company might actually choose not to have the auditor continue its work. Meanwhile, the chair of the company's audit committee resigned effective Sunday, with NQ Mobile naming two new independent directors to the board and to the audit committee. NQ Mobile still hasn't filed its annual report after multiple delays; until it does, it's hard for investors to have any confidence in the company's future prospects.
Synnex fell 5% after reporting its latest quarterly results last night. The business-services outsourcing company did far better in the second quarter than most investors had expected, topping adjusted earnings-per-share estimates by more than 10% and bringing in over $250 million more in sales than shareholders were looking for. But bearish investors instead focused on Synnex's future guidance, in which it said third-quarter earnings would be 2% to 5% lower than expected even though revenue should hold up reasonably well. Despite the disappointment, several analysts remained confident about Synnex's prospects, especially as additional potential clients seek to cut costs and make their operations more efficient through outsourcing.
Weibo dropped 4% as the Chinese microblogging company dealt with reports of censorship. Reports of blockages of a number of online services in China centered on allegations that the government is deliberately restricting access in light of protests in Hong Kong supporting a more democratic system in the emerging-market nation. Some Weibo users reported having their accounts deleted or blocked, raising questions about the compatibility of the authoritarian government and the rise of social media. Weibo faces the impossible task of providing the service users want while also avoiding the wrath of the Chinese government, and the realization of that fact had shareholders less enthusiastic about the company's long-term prospects.
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The article Why NQ Mobile, Synnex, and Weibo Tumbled Today originally appeared on Fool.com.Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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