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: Oh, nuts! Shares of snack foods seller Diamond Foods (Nasdaq: DMND  ) were getting pummeled by Mr. Market today, falling as much as 16% in intraday trading.

So what: Last week, Diamond disclosed that its board is investigating concerns over "certain crop payments to walnut growers." The investigation concerned the company enough that it pushed the proposed closing date of the acquisition of the Pringles business from Procter & Gamble (NYSE: PG  ) until next year.

What's happened since then? Nothing directly from the company, but a Barron's article over the weekend helped stoke investor fears about what this means for Diamond -- including the potential for the P&G transaction to fall apart altogether.

Now what: Considering how little investors know about the situation behind the scenes at Diamond right now, it's pretty staggering that the stock's price has fallen nearly 40% since the day before the investigation was disclosed. Could this turn out to be something very serious that is highly detrimental to the company's long-term prospects? Absolutely. But I remain a bit skeptical that investors aren't overreacting at this point.

Want to keep up to date on Diamond Foods? Add it to your watchlist.

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.


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