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The art market is not always what it seems.

Sotheby's stock price is under pressure — shedding more than 5 percent in trading Monday — after the company's earnings showed a decline in margins. Much of the margin decline was due to two paintings that appeared to sell for massive prices, but actually lost or made very little money for the auction house. Sotheby's won't say which paintings caused the hit, but art industry sources say the first was an Amedeo Modigliani that sold in New York for $157.2 million and the other was a Pablo Picasso that sold in London for $36 million.

To most observers, the sale of paintings for $157 million and $36 million would be huge wins for Sotheby's. But in the current hyper-competitive world of art consignments, where the auction houses pay sellers handsomely to secure top work for auction, the sale prices can often bear little relationship to the actual profits made by the auction houses.

To read more on  CNBC:

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