(Adds detail on Muddy Waters and report's allegations)
NEW YORK, Oct 24 (Reuters) - NQ Mobile Inc shares plummeted in their biggest daily decline ever on Thursday after Muddy Waters Research Group started coverage of the company with a "strong sell" rating, calling it a "massive fraud."
The mobile Internet services company, which is based in Beijing, but has U.S. offices in Dallas, did not immediately return requests for a comment.
The stock fell 47 percent to $12.04, its biggest single daily decline since it began trading in May 2011. Trading was repeatedly halted because of volatility, but volume was several time NQ's 50-day average volume of about 383,000 shares. As of its Wednesday close, NQ has a market cap of about $1.17 billion.
The research group called the stock a "zero" and accused the company of falsifying financial information, including its market share and paying user base in China.
Muddy Waters also wrote that the "vast majority" of NQ's China revenue was fraudulent, with much of it coming from Yidatong (YDT), a shell company that Muddy Waters alleges NQ controls.
"NQ's largest customer is really NQ," the report read. "Our due diligence process included visiting 10 sites purportedly occupied by YDT, all of which were empty or did not exist."
Muddy Waters shorts the stocks it reports on, making money if the stock price declines. Many of its reports, which focus largely on Chinese companies, have been massively successful to that end, devastating the share prices. Previous targets have included Standard Chartered Plc, Focus Media and American Tower Corp.
Perhaps the most high-profile target was against Sino-Forest Corp, which filed for bankruptcy in 2012 following a Muddy Waters report.
(Editing by Clive McKeef. Editing by Andre Grenon)