NYSE: KD
Key Data Points
Kyndryl (KD +0.32%), an IT infrastructure and cloud services provider, closed Monday at $10.59, down 54.94%. The stock sold off after earnings and revenue missed estimates, an accounting review and delayed 10-Q filing were disclosed, and senior finance leaders departed.
Trading volume reached 59.3 million shares, about 1,777% above its three-month average of 3.2 million shares. Kyndryl IPO'd in 2021 and has fallen 74% since going public.
How the markets moved today
The broader U.S. markets were firmer Monday, with the S&P 500 up 0.45% to 6,963 and the Nasdaq Composite rising 0.90% to 23,239. Within information technology services, industry peers International Business Machines closed at $296.34 (-0.87%) and DXC Technology finished at $14.33 (-5.72%), underscoring pressure across traditional IT services providers.
What this means for investors
Kyndryl’s Q3 earnings report went about as bad as possible. First, the company’s sales and earnings figures fell short of Wall Street’s expectations, with revenue rising only 3%. However, the major issue that hit the stock was its announcement that its Form 10-Q (full quarterly report) would be delayed after it “flagged material weaknesses in internal controls.”
This led to a leadership shake-up in the finance and legal departments, most notably the CFO’s departure. Making matters worse, given the nature and scale of today’s stock price decline, numerous law firms have announced securities-fraud investigations into Kyndryl, creating yet another headwind for the stock.
Kyndryl is deeply discounted valuation-wise now, but until there is more clarity on these new issues, I’m staying away.
