Boulder Brands Inc. (NASDAQ: BDBD) has seen its shares get smacked down hard after the food products company announced its preliminary third-quarter earnings. The company has now projected only $0.08 in earnings per share and $133.9 million in revenue, against Thomson Reuters consensus estimates of $0.11 in earnings per share and $142.11 million in revenue. Its third quarter in the previous year had earnings of $0.08 per share and revenue of $118.51 million.

The company also updated its guidance for the fourth quarter to a range of $0.04 to $0.06 in earnings per share from its previous range of $0.18 to $0.20. The company also expects revenue to be in the range of $132 million to $137 million for the fourth quarter. Thomson Reuters has consensus estimates for the fourth quarter of $0.18 in earnings per share and $150.83 million in revenue.

Boulder Brands is currently in its quiet period, until it reports its third-quarter results on November 6. Organic net sales increased roughly 8%, and organic consumption growth increased approximately 12%.

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24/7 Wall St. would remind readers that this stock is heavily shorted, as it has been a “theme stock” in the trend of moving toward gluten-free foods. In fact, the short interest as of September 30 was a whopping 10.39 million shares. This represented almost 24 days to cover, and it was the highest number of shares short in all of 2014.

Chairman and CEO Stephen Hughes said:

During the third quarter, we faced a number of headwinds that impacted our financial results. Smart Balance continued to face challenges in the spreads category, resulting in a larger than expected decline. In addition, as noted on our second quarter call, the mix shift of our fast-growing, lower margin Natural segment is significantly outpacing our higher margin Balance segment and is therefore putting increased pressure on our gross margins.

He would go on to say that the company is seeing consumption growth in line with expectations, but that it is seeing more of its business come from the fast-growing, low-margin, natural segment. However, the company’s largest customer has been “normalizing” some inventory, causing a drop in fourth-quarter shipments.

Shares of Boulder Brands were down about 21% at $10.05 shortly after the first hour of trading on Wednesday, in response to its worsening outlook. Note that the low of the morning was all the way down at $8.72, so some of that recovery almost certainly has to be short covering. The other key issue was a severe volume spike — 5 million shares traded hands just after the first hour, versus average volume of almost 560,000 shares. The stock has (or had) a consensus analyst price target of $17.56 and a 52-week trading range of $8.72 to $18.46. The company has a market cap around $615 million after the drop.

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