Why did IBM stock drop sharply?

The stock fell after the CEO warned that Q2 earnings would miss Wall Street expectations, prompting an investment bank to cut its price target.

IBM Warning Triggers Worst Single-Day Stock Drop in 40 Years

Q: Which segments did IBM cite as weak?

The CEO cited challenges in both the software and consulting segments.

IBM shares crashed toward their worst single trading day in nearly four decades after CEO Arvind Krishna told investors the company's second quarter fell short of Wall Street expectations. One bank immediately cut its price target.

IBM (IBM) shares plunged more than 10% on Tuesday, July 14, heading for their worst single-day performance in nearly 40 years, after CEO Arvind Krishna warned investors that the company's second-quarter earnings would miss Wall Street expectations.

Key Financial Results

IBM has not yet released its official Q2 earnings report, but the CEO's warning indicates that both revenue and profit will fall short of estimates. Full results are expected later this month.

Highlights from the Statement

Krishna said the company's Q2 performance did not meet expectations, without providing specific details. He cited challenges in both the software and consulting segments.

Future Guidance

IBM did not provide specific guidance for the next quarter, but analysts expect the company to update its outlook when it releases full results.

Impact on the Stock

IBM stock collapsed more than 10% in Tuesday's session, on track for its largest single-day loss since October 1987. One investment bank immediately cut its price target and advised clients to reassess their positions.

What This Means for Investors

Investors should wait for the official earnings release to assess the magnitude of the miss. The early warning may indicate structural challenges in IBM's business, but it could also be just a weak quarter.