Kyndryl shares have fallen on the stock market this past Monday by no less than 54.92% after the IT infrastructure services company delayed the presentation of its results for the last quarter, the third of its fiscal year 2026. In addition, several of its managers, including its CFO, have left the company, which has announced a review of its accounts due to different “weaknesses” that they have not specified and that they have apparently detected in their internal controls.
When the news broke, its shares began to rapidly lose value. So much so that, according to Reuters, its market valuation went from around $5.37 billion to around $2.4 billion in a few hours, after losing $3 billion in value. At the close of the New York Stock Exchange session, each of its titles had a value of 10.59 dollars, compared to the 23.49 it was worth at the close of the previous session.
According to Kyndryl, these weaknesses affect several quarters, including its fiscal year ending in March 2025, as well as the first two quarters of its fiscal year 2026. The company’s audit committee reportedly began reviewing its cash management practices, communications, and related internal controls after receiving voluntary document requests from the United States Securities and Exchange Commission.
They have also told investors that they should not rely on their assessment of internal financial reporting controls or the opinion of their auditor PriceWaterhouseCoopers on such mechanisms expressed in Kyndryl’s fiscal 2025 annual report.
Apart from these measures, Kyndryl has confirmed the departure from the company of its until now CFO, David Wyshneras well as the resignation of Vineet Khurana as Global Controller of the company, that is, as Kyndryl’s Chief Accountant.
Harsh Chughwho had been the company’s global director of practice, corporate development and administration for just a few weeks, will now be its CFO, and Bhavna Doegar its Chief Accounting Officerwith immediate effect. Mark Ringes, previously Vice President and Deputy General Counsel of Kyndryl, has also been appointed as its Interim General Counsel, replacing Mark Sebold, who has also left his position effective immediately. It is not confirmed whether these changes are due to the review of the company’s financial information, although everything indicates that they are.
Kyndryl wanted to reassure shareholders and clients that they do not expect the weaknesses detected, as well as the changes in their financial management, to have any impact on their balance sheets, income statements, cash flow statements or statements of net worth. But not only have they not convinced shareholders, but they have also not cleared up the doubts of the market and analysts. This is not exactly helped by the fact that they are delaying the submission of their quarterly report to the SEC, and that they have announced that they do not plan to restate previous financial reports.
Thus, JP Morgan recommends reducing the stake that shareholders have in Kyndryl, citing as reasons its forecasts, as well as the change in financial management, which in the opinion of its experts will delay its recovery and open new doubts about its investment strategy.
That is to say, he is directly recommending that his shares be soldin addition to offering a negative view of its forecasts for its current fiscal year. These indicate adjusted pre-tax income of between $575 million and $600 million, an adjusted EBITDA margin of around 17.5%, free cash flow of between $325 million and $375 million, and a revenue decline of between 2% and 3%.
They highlight the change from previous forecasts with an income growth of 1% to a drop of three or four percentage points. Last quarter, Kyndryl had total gross revenue of $3.86 billion, up 3%, thanks to sales related to agreements it has signed with several cloud hyperscalers.
Kyndryl emerged as a spinoff of parent company IBM’s infrastructure services division in November 2021. From then until now, the company, dedicated to IT infrastructure services, has been restructuring several contracts inherited from IBM.
