TLDR
- Kyndryl (KD) stock crashed 53% to $11.05 after announcing delayed financial filing due to material weaknesses in internal controls
- CFO David Wyshner departed and Global Controller Vineet Khurana stepped down, with interim replacements named immediately
- Company revealed material weaknesses span fiscal year 2025 and first two quarters of fiscal 2026
- Kyndryl cut fiscal 2026 revenue guidance to -2% to -3% year-over-year in constant currency, citing extended sales cycles
- Oppenheimer downgraded stock from Outperform to Perform, removing price target entirely
Kyndryl stock experienced a brutal Monday trading session, plummeting 53% to $11.05. The selloff came after the IT services company dropped a bombshell about delayed financial reporting and major executive departures.
The company announced it would delay filing its December quarter report. The reason? Material weaknesses in internal control over financial reporting.
These aren’t minor issues either. The weaknesses extend back through the entire fiscal year that ended March 2025. They also cover the first and second quarters of fiscal 2026.
Kyndryl tried to soften the blow with one key detail. The company stated it doesn’t expect any impact to balance sheets, income statements, cash flow statements, or equity statements.
But investors weren’t buying it.
Executive Shakeup Raises Questions
The timing of the CFO departure raised eyebrows across Wall Street. Chief Financial Officer David Wyshner is out, effective immediately.
Harsh Chugh stepped in as interim CFO. Chugh currently serves as global head for corporate development and administration. He previously held the Chief Operating Officer position.
The changes didn’t stop there. Global Controller Vineet Khurana also stepped down from his role.
Bhavna Doegar, senior vice president of Finance and Strategy, took over as interim corporate controller.
When asked if the executive changes connected to the financial reporting review, Kyndryl declined to comment. That silence only fueled more speculation.
Revenue Guidance Takes a Hit
The bad news continued with revised financial projections. Kyndryl released third quarter results alongside a reduced revenue forecast for fiscal 2026.
The company now expects constant currency revenue to decline 2% to 3% year-over-year. Management blamed extended sales cycles for the downward revision.
Kyndryl Consult, one of the company’s fastest-growing businesses, saw particularly stretched sales cycles. Pre-spin legacy IBM contracts continue creating headwinds.
Oppenheimer analyst Ian Zaffino wasted no time responding. He downgraded Kyndryl from Outperform to Perform. He also removed the firm’s price target entirely.
The stock hit a 52-week low of $10.82 during Monday’s session. Before this latest crash, shares had already dropped 46% over the past 12 months.
The stock now trades with a P/E ratio of 13.91 and shows a beta of 1.93. Gross profit margins stand at 21.4%, which analysts consider weak for the sector.
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