Diamond Foods Shares Plunged: What You Need to Know

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of nut and snack slinger Diamond Foods (NAS: DMND) were getting boiled like peanuts today, falling as much as 24% on reports that Diamond's board is investigating some accounting procedures.

So what: While the day has been long on losses for Diamond shareholders, it's been short on details. The terse statement from Diamond simply said that the board launched an investigation after the chairman of the audit committee received "an external communication regarding Diamond's accounting for certain crop payments to walnut growers."

That's not much to go on, but the matter is serious enough that it's delaying the closing of Diamond's acquisition of Procter & Gamble's (NYS: PG) Pringles unit. That deal is now expected to close in the first half of next year.

Now what: It's tough to say what investors should expect considering the lack of detail on the issue from Diamond. However, what we do know is that the market action today knocked close to $300 million off of Diamond's market cap. While the walnut issue may turn out to be serious, I'm incredulous that it warrants that extent of a revaluation of the company.

Want to keep up to date on these companies?

At the time this article was published Motley Fool newsletter services have recommended buying shares of Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye. 

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners