The shares of once-high flying Poseidon Concepts Corp. are cratering on the Toronto market, following a stunning statement by a special committee of its board that about two-thirds of its previously posted revenue this year should not have been recorded as revenue on its financial statements.
The stock lost most of its value, sagging 73 per cent to trade at only 24 cents. Poseidon, which makes storage tanks used in the natural gas fracking business, traded as high as $15 in the past year as investors piled into a play on the hottest sector of the gas market.
"This is probably the ugliest story that we've seen on Bay Street since Sino-Forest," observed Martin Braun, senior investment strategist at J.C. Clark Ltd., a Toronto-based money manager.
"They've now decided that a lot of the revenues never were revenues. That's not good," Mr. Braun said.
As a result of the special committee's work, Poseidon's first, second, and third quarter 2012 financial statements will be restated.
In all, about $95-million to $106-million of the company's $148.1-million revenue for the nine months ended Sept. 30, 2012, wasn't properly recorded.
The tumble from grace of the one-time market darling is a big coup for the short sellers on the street, who have been profiting as the shares have tanked.