Diamond Foods Shares Plunged: What You Need to Know

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.

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