Shares of Kyndryl fell more than 11% on Thursday, March 27, 2025, following the release of a research report by short-seller Gotham City Research. The report alleged that the IT services provider has manipulated certain financial metrics.
Gotham City Research claimed that Kyndryl 'manipulates' reported adjusted EBITDA plus adjusted free cash flow to artificially give the appearance of generating profits and cash flow. The report asserted that, in reality, Kyndryl generates losses and burns cash.
The short-seller also stated its belief that Kyndryl faces higher incremental IBM software costs, which are expected to pressure earnings significantly below consensus forecasts for fiscal year 2025. This report raised concerns about the company's financial transparency and future profitability.
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