TLDR
- Kyndryl (KD) shares plummeted 53% to $11.05 on Monday following announcement of delayed quarterly filing
- Material weaknesses in internal financial controls discovered across fiscal 2025 and first half of fiscal 2026
- CFO David Wyshner and Global Controller Vineet Khurana both departed, replaced by interim executives
- Company slashed fiscal 2026 revenue outlook to -2% to -3% year-over-year decline
- Oppenheimer downgraded stock to Perform, citing extended sales cycles in key growth business
Kyndryl shares suffered a catastrophic Monday selloff, dropping 53% to $11.05. The IT services company shocked investors with news of delayed financial reporting and sweeping executive changes.
The company won’t file its December quarter report on time. Internal control weaknesses over financial reporting forced the delay.
These problems aren’t recent. Material weaknesses span the entire fiscal year ended March 2025 plus the first two quarters of fiscal 2026.
Kyndryl insists the issues won’t affect its financial statements. The company claims balance sheets, income statements, and cash flows remain unchanged.
Wall Street didn’t wait around to find out.
CFO and Controller Both Out the Door
Chief Financial Officer David Wyshner left the company effective immediately. Harsh Chugh, global head for corporate development and administration, took over as interim CFO.
Chugh previously served as Chief Operating Officer. His emergency appointment signals the urgency of the situation.
Global Controller Vineet Khurana also exited his position. Bhavna Doegar, senior vice president of Finance and Strategy, stepped into the interim corporate controller role.
Kyndryl refused to answer whether the executive departures connected to the accounting review. That non-answer spoke volumes.
Revenue Forecast Slashed
The company released third quarter results alongside grim guidance. Fiscal 2026 revenue is now expected to fall 2% to 3% on a constant currency basis.
Extended sales cycles drove the downward revision. Kyndryl Consult, one of the fastest-growing business units, experienced particularly long delays.
Legacy IBM contracts from before the spinoff continue dragging on performance. These pre-existing deals create persistent headwinds.
Oppenheimer analyst Ian Zaffino moved fast. He downgraded Kyndryl from Outperform to Perform and yanked his price target completely.
The stock touched a 52-week low of $10.82 during Monday’s bloodbath. Shares had already fallen 46% over the prior 12 months.
The company trades at a P/E ratio of 13.91 with a high beta of 1.93. Gross margins of 21.4% remain weak compared to sector peers.
Investors now face months of uncertainty as Kyndryl works through its internal control problems and searches for permanent financial leadership.
