Why Has IBM Stock Had Its Worst Month in the Last 4 Years?



IBM saw its worst fall in the last four years

Earlier, we discussed the factors that affected the DJIA (Dow Jones Industrial Average). Recently, IBM (IBM) helped the DJIA to recover the majority of the 510-point fall it experienced on April 4, 2018. On April 19, IBM stock fell ~7.5%.

To date in 2018, IBM stock has lost 5.4% of its value. In the last year, IBM stock has fallen ~9.2%. The S&P 500 Index (SPX) has generated a 12.5% return over the same period. Thus, IBM stock has underperformed the index. The stock is currently trading at $144–$145, a ~28% fall from its all-time high in 2013, when it was trading at ~$200.
ibm revenue growth

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Lower-than-expected guidance weighed on stock

IBM’s 1Q18 revenue and earnings exceeded analysts’ estimates. However, its 2018 guidance came in below consensus expectations, which disappointed investors and made them question the company’s transition and transformation plans. This disappointment weighed on IBM stock. IBM’s 2018 EPS (earnings per share) guidance of $13.80 fell short of analysts’ expectation of $13.83. With the 5.2% growth in its revenue in 1Q18, the company saw its second straight quarter of revenue growth.

IBM’s 1Q18 revenue and non-GAAP (generally accepted accounting principles) EPS of ~$19.1 billion and $2.45, respectively, exceeded analysts’ expectations by $18.8 billion and $2.42, respectively.


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