Embattled stock Diamond Foods (DMND) suffered through one of the worst single-day drops in share price since the company’s IPO in July 2005 after news that the company would not be filing its quarterly reports on time amid swirling controversy over potential improper payments to walnut farmers.
Stock Yo-Yos Over Last Two Days
On Friday, Diamond shares spiked, jumping 52.77 percent in a single day after KeyBanc analyst Akshay Jagdale told clients that he expected the investigation into shady accounting practices to wrap up quickly. Diamond has been under investigation for payments to walnut farmers that may have been used to illegally shift expenses into the new fiscal year. Then, on Sunday, the Wall Street Journal reported that some growers questioned the nature of the curious payments they received. The story took a bizarre and tragic turn on November 22, when Joe Silvera, a member of the audit committee responsible for investigating the walnut payments, committed suicide after having to recuse himself from the committee. While no clear link between Silvera’s suicide and the audit committee’s findings exists at this point, the news still sent shares into another nosedive.
All of the swirling controversy has Diamond’s planned $2.35 billion purchase of the Pringles brand from The Procter & Gamble Company (PG) in dire straits. Today’s news that the company would be filing late because of the continued accounting probe sent shares plummeting once again, dropping over 22 percent and nullifying a significant portion of Fridays gains. All told, Diamond’s accounting controversy and the continued hold-up of the Pringles purchase has had a devastating effect on investors, with shares falling nearly 60 percent over the last three months.
Food Makers Lose On Day
On a day where stocks across the markets were down, Diamond was one of several major food producers that lost value. The Dole Food Company, Inc. (DOLE) lost over 4.5 percent, the Lancaster Colony Corp. (LANC) was down almost 2.5 percent, and Unilever (UL) lost over 1.5 percent.