MDC Partners Inc (NASDAQ:MDCA) stock plunged by as much as 23% after well-known short-selling firm Gotham City Research said it’s worth less than $1 per share. In a tweet before the report‘s release, Gotham compared the company to Valeant and Quindell “before they imploded.”

MDC Partners Inc Stock Plunges On Gotham City Report

“Like Valeant Pharmaceuticals, but with understated debts”

Gotham, which is headed by Daniel Yu, also references Valeant in the headline of the report and alleges that MDC Partners’ true debt is understated by about $300 million or 23% of last year’s stated debt. The short-selling firm also called MDC’s revenue and earnings into question, stating that its organic revenue growth is actually about 1.5% rather than the 7.2% that was reported. Further, Gotham said this growth rate is “well below industry averages.” The firm also claims that 42% to 53% of MDC’s reported profits “are suspect.”

Interestingly enough, Gotham’s not the only one that has drawn comparisons between MDC Partners and Valeant Pharmaceuticals, although past comparisons were far less negative in nature. The short-selling firm claims that about a year ago, others referred to MDC as “the Valeant Pharmaceuticals of advertising agencies.” Around that time, Valeant’s stock was setting record highs, which Gotham said caused investors to see it as “a great company.”

Further, MDC Partners went public through a reverse merger like Valeant did, although Gotham warned that this type of entry is common for “low quality companies & outright frauds.”

Conflicting data?

Gotham notes that on the surface, MDC Partners Inc (NASDAQ:MDCA) appears to be doing well as it claims to be generating industry-leading organic growth and strong EBITDA margins. However, the firm also states that MDC “appears to be an exceptionally poor company, bleeding cash & issuing debt.” Yu’s firm said that it hasn’t seen conflicting qualities like this since Valeant and Quindell.

The short-selling firm also warned that MDC Partners is still facing an investigation by the U.S. Securities Commission and noted that not long after the probe was opened, founder and then-CEO Miles Nadal left the firm. Gotham questions why the investigation is still ongoing, however, if all the problems left with him.

A spokesperson for MDC Partners emailed us this response to Gotham’s allegations.

“MDC Partners is in a pre-earnings quiet period and will report its results and host a conference call with investors after the market close on Tuesday, May 3rd. MDC management is confident in its financial reporting and accounting practices, and intends to defend itself against the false and misleading accusations of this short seller report, which is solely focused on destroying the value we are creating for our shareholders for their own personal gain.”

Gotham City holds top ranking among short-sellers

According to CNBC, Gotham City holds the top position based on performance by Activist Shorts Research, which tracks more than 100 short-sellers. The firm’s average one-year return is -58%, and its reports frequently move markets, which is relatively rare among short-selling firms like Gotham. Citron Research and Muddy Waters are two other high-profile short-selling firms that usually move the markets with their reports, although Muddy Waters is said to be preparing to launch a hedge fund with a different research model.

Some of Gotham’s past targets include Endurance International Group, which has declined by more than 40% since the April 2015 report. Also Gowex, a Spain-based tech company, filed for bankruptcy within days of Gotham’s July 2014 report about it.

You can check out Gotham’s full report here.