Kyndryl (KD) Stock: Why This 55% Crash Has Analysts Running for the Exits

TLDR

• Kyndryl stock plunged 55% to $10.59 Monday following the departure of CFO David Wyshner, General Counsel Edward Sebold, and Global Controller Vineet Khurana
• The company revealed an SEC accounting review and material weaknesses in internal financial controls
• Fiscal 2026 revenue guidance was slashed to a 2-3% decline from prior 1% growth expectations, while free cash flow forecast dropped to $350 million from $550 million
• Guggenheim downgraded shares to Neutral and withdrew its price target citing uncertainty around the company’s path forward
• J.P. Morgan issued a rare double-downgrade to Underweight while Oppenheimer cut its rating to Perform

Kyndryl Holdings shocked investors Monday with a perfect storm of bad news. The IT infrastructure company watched its stock crater 55% to $10.59 in a single trading session.

Kyndryl Holdings, Inc., KD

Three top executives walked out the door. CFO David Wyshner, General Counsel Edward Sebold, and Global Controller Vineet Khurana all left their positions. Khurana moved to a lesser role as senior vice president of business operations.

The executive exodus wasn’t the worst part. Kyndryl disclosed it was responding to voluntary document requests from the Securities and Exchange Commission regarding accounting practices.

The company admitted material weaknesses in internal controls over financial reporting. Management promised a remediation plan but provided zero specifics. More information will arrive in a delayed quarterly filing.

Analysts Pull the Plug

Guggenheim Partners analyst Jonathan Lee downgraded Kyndryl to Neutral from Buy. The firm pulled its price target completely. Lee said the announcements raised more questions than they answered.

J.P. Morgan delivered a brutal double-downgrade, slashing its rating to Underweight from Overweight. Oppenheimer dropped coverage to Perform from Outperform. The message from Wall Street is clear: stay away.

The stock managed a 5% bounce Tuesday to $11.12. But shares still sit down 58% year-to-date and 73% over the past year. That minor recovery hasn’t changed analyst sentiment.

Guidance Gets Gutted

Kyndryl’s financial outlook deteriorated sharply. The company now expects fiscal 2026 revenue to fall 2% to 3%. Previous guidance called for 1% growth.

Free cash flow projections took an even bigger hit. Management slashed estimates to $350 million from $550 million. That represents a 36% cut to expected cash generation.

The revised numbers cast serious doubt on Kyndryl’s 2028 target of $1 billion in adjusted free cash flow. Investors need proof that management can execute before believing in long-term goals again.

Third-quarter results disappointed across the board. Revenue declined faster than expected. Margins compressed. The IBM spinoff continues struggling to find its footing.

What Happens Next

The SEC review timeline remains unknown. Kyndryl hasn’t said when it expects to complete the accounting assessment. Investors face months of uncertainty about potential financial restatements.

Lee emphasized that restoring credibility requires concrete action. Management needs to demonstrate tangible progress on multiple fronts. Words won’t cut it anymore.

The delayed quarterly filing should provide more details about internal control weaknesses and remediation plans. Until that document arrives, uncertainty will dominate the stock.

Kyndryl’s client base consists largely of legacy IT infrastructure contracts. These generate steady revenue but offer limited growth. Competition from cloud providers adds pressure.

Management turnover compounds existing operational challenges. New executives need time to assess the business and implement changes. Any turnaround just got pushed further out.

The company bet on managed services and consulting for growth. But winning new business has proven difficult. Many customers prefer building internal capabilities or using established cloud platforms.

The post Kyndryl (KD) Stock: Why This 55% Crash Has Analysts Running for the Exits appeared first on Blockonomi.