IBM Holding onto Gains after 27% Stock Drop

International Business Machines (IBM) stock fell 0.29% on Wednesday after days of continuous gains helped to offset at least some of the company’s massive stock loss from mid-July.

IBM gained nearly 12% in the last five days, and Wednesday’s small dip was not enough to hurt that impressive growth. The technology company needs their stock to make back its losses very quickly after it fell 27% between July 13th and 15th.

When IBM’s CEO issued a letter explaining their revenue numbers in mid-July, that set off a sharp reaction from the market. Investors pulled out and the market braced for the worst. Then, IBM issued their quarterly report less than two weeks later. The most egregious financial detail of that report was that IBM’s revenue only increased by 1% year over year.

Can IBM Stock Keep on Climbing?

The question facing investors now is whether IBM can make back lost ground and put in a better showing for the next quarterly report. To some extent, that seems to be a very difficult challenge because the CEO’s letter explained that customer buying habits are different now. Their customers are shifting away from some of the ways they used to invest and are focused on building data storage capabilities.  

IBM’s stagnant revenue stream is just a victim of the market conditions and trends, according to company CEO Arvind Krishna. Those trends are not likely to change soon, and IBM may struggle to innovate and pivot enough to grow its business for a while.

For the most recent quarter, they brought in $17.16 billion and earnings per share of $2.93. In order for the company to improve on those numbers for the next quarter, they will need to deal decisively with criminal charges of fraud that have kept investors from putting too much confidence in the company lately. They also need to navigate the changing market trends successfully, which could mean massive institutional changes in order to ensure profitability.

Currently trading at $227, IBM stock could go higher in the next year, but analyst estimates are conservative. Zacks Research says the average price target is at $253, giving an upside of only 11%. However, they estimate the maximum target much higher at $365. That could mean an upside of 60%.For that to happen, the market would have to swing in IBM’s favor or they would have to make dramatic changes to catch up.

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Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.