Muddy Waters, an investment/research firm famous for its short calls on Chinese stocks, has announced a new short position in NQ Mobile Inc., and the stock is down an incredible 50% and falling.

NQ is a Chinese telecom company traded on the NYSE here in the States. It has a market cap around $825 million and counting down.

In a research note, Muddy Waters writes that NQ Mobile is a "massive fraud" and that it will go to zero.

Here's a quick break down from Muddy Waters:

At least 72% of NQ's purported 2012 China security revenue is fictitious. NQ's largest customer by far is really NQ. Our research estimates that NQ's real market share in China is only about 1.5%, versus the approximately 55% it reports. We estimate that its China paying user base is less than 250,000, versus the six million NQ claims.

NQ's Antivirus 7.0 is unsafe for sale to consumers, and we consider it to be spyware that makes users' phones vulnerable to cyber attack. NQ makes a weak attempt to protect users' private data as it's uploaded through the Chinese government's firewall to NQ's server. Phones are vulnerable to MITM attacks because NQ fails to adhere to basic security protocols. MW engaged top-flight security software engineers to analyze this product.

NQ's purported international revenue of $36.5 million is likely less real than its PRC revenue. NQ claims to generate international revenue in obscure markets, and through mysterious counterparties that seem to seldom pay.

NQ's future is as bleak as its past. The recent pivot to advertising and gaming is merely an attempt to change to a fraud that NQ hopes will be less obvious. NQ cannot monetize users that it does not have.

NQ's acquisitions are highly likely to be corrupt.

NQ's cash balances are highly likely to not be real. In NQ's 2012 20-F, PwC classified all cash and term deposits as Level 2 assets (slightly hard to value), which is the first time we have seen this. NQ's purported movements of cash from its IPO almost certainly did not occur due to PRC FX controls. We therefore believe the term deposits are likely forgeries.

And here's the stock... incredible dive.