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Factors Pressuring IBM’s Stock Price in 2018 Year-to-Date

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IBM’s stock performance versus the S&P 500

In 2018 year-to-date, International Business Machines (IBM) stock has barely appreciated. On January 2, 2018, IBM stock was trading at the $154.00 price level and is currently trading at ~$157.00. Although there has been a minimal increase in the company’s stock price since the beginning of the year, its stock has seen some ups and downs.

The S&P 500 Index (SPX), which started on a positive note in 2018, dropped in early February. The index has risen since then, but it still hasn’t been able to reach its level reported at the beginning of the year. In 2018 so far, the S&P 500 Index has lost ~1.0%. However, IBM stock has risen 2.0% so far this year, outperforming the S&P 500 Index.

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Factors that maintained IBM’s stock momentum

In January 2018, IBM’s 4Q17 results marked the first time in the past 24 quarters in which the company posted revenues of $22.5 billion, an increase of 4.0% on a year-over-year basis. IBM’s non-GAAP[1. generally accepted accounting principles] earnings per share (or EPS) stood at $5.18 per share.

IBM’s 4Q17 revenues and earnings exceeded analysts’ expectations, as the company was expected to post revenues and EPS of $22.1 billion and $5.16, respectively. IBM’s 4Q17 non-GAAP EPS excluded a one-time charge of $5.5 billion associated with the Tax Cuts and Jobs Act.

IBM’s revenue turnaround was due to the company’s increased focus on new and emerging technologies. These technologies include cloud computing, AI (artificial intelligence), blockchain, and big-data analytics, as the chart above shows. IBM’s new business initiatives and operations comprise its strategic imperatives.

The company’s leadership in hosted private cloud services has enabled IBM to maintain its position as the third-largest player in the competitive cloud space.

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