After destroying Paradise Estate, Pluma digs into its foundations to retrieve one half of the flash stone. The kids and ponies are rather put out at the loss of their home, so Pluma offers to use the flash stone's powers to restore it. However, as only half the stone is on hand, only half of the house gets rebuilt. In order to get their home back and, in the bargain, to stop Squirk from flooding Dream Valley and ruling it with an iron tentacle, they decide to accompany Pluma and hopefully stop Squirk.
Once at the river, Pluma sends a beam from the stone into the water to alert Squirk while Buttons and Spike wait nearby. Elsewhere, Fizzy creates bubbles large enough for the kids to enter while Megan calls upon the sea ponies to push them underwater. The beam alerts Squirk, who is waiting alongside a captive Grandpa Ruff in his lair, and he sends him minion Crank to retrieve the flash stone. After a brief tug-'o-war to buy time for the diving team to prepare, which ends when an impatient Squirk arrives and steps in, the flash stone is retrieved by the villains and they retreat underwater.
The away team manages to infiltrate Squirk's lair and free Ruff, but they're soon found by the monster and left in a deathtrap made from a shark's skull. Squirk and Crank leave search for the flash stone's other half, and on finding it Squirk reunites the two pieces, regains possession of the full relic, and begins the process of flooding Dream Valley.
This episode contains examples of:
- Call-Back: The signal shell that Megan got from the seaponies back in the first TV special is used again here.
- Distressed Dude: Grandpa Ruff is trapped in a cage in Squirk's lair and held hostage to force his granddaughter to serve the villain, and needs to be rescued by her and the heroes.
- Floating in a Bubble: Fizzy creates large bubbles which, once the kids enter them, let them float freely through the air and the water.
- The Great Flood: Once the flash stone is back in his grasp, Squirk uses it to send great gouts of water out into Dream Valley with enough force to shatter hillsides and uproot trees, quickly filling its lower areas with a swiftly increasing tide of water.
- Villain Song: "You Ain't Seen Nothing Yet", where Squirk gloats about all the wicked things he'll do once he's back in power.
- Your Size May Vary: Crank is generally about half the size of the ponies, but in several shots he's drawn as no larger than a real lobster or as a considerably bigger than Megan and Pluma.
