IBM Experiences Record Single-Day Drop in its 115-Year History Following Unexpected Earnings Warning
IBM witnessed a staggering 25.21% drop in shares on Tuesday, July 14. This marked the most significant single-session decline in the tech behemoth’s 115-year history. The plummet came in the wake of a shocking pre-earnings warning from CEO Arvind Krishna, revealing that Q2 results significantly missed expectations. The stock concluded at $217.07, erasing approximately $67 billion in market value, and exceeding the previous record drop of 22.96% set on Black Monday in October 1987.
IBM announced a preliminary Q2 revenue of $17.2 billion, falling short of the consensus estimate of $17.86 billion by about $660 million. The adjusted earnings per share stood at $2.93, missing the projected $3.02. Krishna attributed the shortfall to a sudden diversion in client spending. Enterprises quickly shifted IT budgets towards AI hardware, servers, storage, and memory chips, where prices have surged by up to 116%, adversely affecting IBM’s software, consulting, and mainframe businesses. Infrastructure revenue dipped by 7%, software growth was a mere 5% (significantly below double-digit targets), and consulting remained stagnant.
The warning triggered a shockwave across the tech sector, causing temporary dips in Microsoft and Salesforce before they rebounded. IBM’s full Q2 earnings report is set for release on July 22. Analysts are split in their outlooks: HSBC downgraded the stock to “Reduce” with a price target of $191, while Oppenheimer and Morgan Stanley retained more positive perspectives.
Source: CNBC – IBM stock plummets 25%, marking worst day on record, following Q2 earnings warning