Chinese Internet security service provider Qihoo 360 Technology Co on Tuesday refuted fraud accusations made in a report released by Citron Research.

"The company has either not been forthright about their revenue model to Wall Street, or there is a financial fraud unfolding," the Citron report said on Tuesday, expressing doubts about Qihoo's credibility over revenue.

Responding to the accusation, the company said in a statement late on Tuesday that it "believes the article contains numerous errors of fact and misleading speculations."

"Monthly rates for advertising are consistently rising as we get higher traffic, and Qihoo has the largest traffic in China," Zhou Hongyi, chairman and CEO of Qihoo 360, also said on his Weibo.

"Citron must be speculating as they lose money in short-selling".

The average advertising rate for a link on Qihoo portal's front page is 200,000 ($31,440) to 250,000 yuan per month, Citron said, estimating Qihoo's quarterly income from advertising at $5.54 million to $7.75 million, much less than the $20.9 million stated in Qihoo's third quarter financial report.

"Even if Qihoo's revenues were reported accurate to the penny, the company is still overvalued by a factor of 4 or 5 times," the US-based research company said, maintaining the price target of Qihoo's share price at $5, compared with its current price of $17.62.

It is the third time that Citron, one of the most vocal short-sellers of Chinese stocks, has published a negative report on Qihoo, following two previous reports in November.

Liu Qiangdong, CEO of online retailer 360buy.com, Li Guoqing, CEO of dangdang.com and Bi Sheng, CEO of letao.com all have said on Tuesday on their respective Weibo sites that they paid much higher than 200,000 yuan a month in advertising fee for their links on Qihoo.

"The advertising rate of 200,000 yuan per link mentioned in the Citron report is substantially undervalued, and millions of yuan is quite normal this year as online retailers intensely compete for market, with advertising on portals a commonly used method to get traffic," You Tianyu, an information technology analyst at iResearch Consulting Group, told the Global Times on Tuesday, adding that Citron has inadequate knowledge of Chinese companies.

"Qihoo has a unique business model, such as free anti-virus service, which the market does not understand. That's why it was targeted for short-selling several times," Li Weidong, research director at consultancy China Venture, told the Global Times on Tuesday.