The worst day since 1929 for ADM shares saw a 24% plunge, with the CFO being placed on leave.

On Monday, the Nutrition segment of the company experienced its largest one-day drop in shares since 1929, with a 24% decline, following the placement of CFO Vikram Luthar on administrative leave as the company investigates its accounting practices.

The global grains merchant reduced its 2023 profit forecast and postponed the release of its fourth-quarter results due to an investigation into certain inter-segment transactions, in response to a voluntary document request from the U.S. Securities and Exchange Commission (SEC).

The soy processing facility's downtime and weak demand for meat alternatives and other products are putting pressure on ADM's high-margin Nutrition segment, which is already facing uncertainty due to the probe.

The stock of ADM closed at $51.69 per share, which is the lowest price since February 2021. This 24% decline was the largest one-day percentage drop for the shares since November 13, 1929, two weeks after the market crash of 1929, according to the Chicago-based Center for Research in Security Prices.

The SEC did not respond to a Reuters request for comment, while ADM stated that it is cooperating with the SEC.

Luthar has been with ADM for nearly two decades, holding various leadership positions before being named CFO in 2022.

Despite strong earnings from crop processing and demand for food, animal feed, and biofuel, the Nutrition segment has underperformed in recent quarters.

The food, beverage, and nutritional supplements industries, among others, utilize the segment's supply of plant-based proteins, natural flavors, and emulsifiers.

Analysts stated that recent significant investments in animal feed and pet nutrition have not met expectations.

The SEC request led to four brokerages downgrading ADM's stock, and the company adjusted its earnings forecast for the fiscal year ended December, 2023 from $7 a share to $6.90 per share.

Adam Samuelson, a Goldman Sachs analyst, emphasized that comprehending the full extent of potential accounting irregularities and their effects on Nutrition segment revenues/margins is crucial.

One of the world's largest grain traders and processors, ADM, has been expanding its flavors and nutrition business in an effort to reduce its vulnerability to fluctuations in commodity prices.

In 2014, it acquired WILD Flavors for $3 billion, and recently, towards the end of 2023, it announced its intention to buy UK-based flavor and ingredient firm FDL.

Analysts at BMO stated that if the issue is solely transfer pricing (tax avoidance), it should not affect the 2024 EPS outlook. As a result, ADM can likely continue with buybacks and recent acquisitions despite the investigation.

UBS analysts advised traders to consider shares of and rival grain merchant as an alternative until more clarity is provided about the issues with ADM's nutrition segment accounting.

Ismael Roig, who has been with the company since 2004, was appointed as its interim CFO by ADM.