IBM stock fell nearly 25% on Tuesday, its worst day since 1987, after the company warned second-quarter earnings would miss expectations.
1:45 PM
IBM shares fell nearly 25% on Tuesday after the company warned investors that second-quarter financial results, to be released next week, would fall short of expectations.
Chief Executive Arvind Krishna issued the warning, prompting the sharp decline in trading. Shares dropped 18% during pre-market trading before the opening of Wall Street, and continued falling after the market opened. By mid-afternoon, shares were trading around $216.80, according to reports.
The decline marks IBM's worst trading day since October 19, 1987, when the stock lost 23.7%, according to CNBC. The company is on track for its largest single-day percentage loss in nearly four decades.
IBM provided preliminary second-quarter results showing revenue of $17.2 billion, representing only a 1% increase from the same period last year. Wall Street had expected revenue of $17.86 billion. The company also reported adjusted earnings of $2.93 per share, below analyst expectations.
According to company statements, IBM failed to respond quickly enough to a shift by enterprises toward servers, memory, and storage systems designed for artificial intelligence applications. This lag in adapting to market demand contributed to the disappointing results.
Ignacio Mieres, head of research at investment app XTB, attributed the stock decline to a combination of results that fell short of expectations and increased uncertainty about the company's short-term growth prospects.
The full second-quarter earnings report is scheduled to be released next week.
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