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 Diamond Foods (NAS: DMND) have fallen 10% today after the company announced the SEC had opened a formal probe of its accounting practices.
So what: The SEC is investigating how the company accounted for payments last year, which may have been shifted to this year to boost earnings. As a result, Proctor & Gamble (NYS: PG) said it wouldn't allow the $2.35 billion sale of Pringles to Diamond Foods go through until the investigation was complete.
Now what: To put salt in the wound, analysts at Jefferies downgraded the stock and now have a price target of $27, all the way from $94 in October. There's really nothing good to report here because you know it's bad news when the SEC starts snooping around your accounting offices. Shares are just too risky for this Fool right now, and I'll wait for more clarification around the investigation before considering buying.
Interested in more info on Diamond Foods? Add it to your watchlist byclicking here.
At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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. The Motley Fool has a disclosure policy.