Kyndryl falls after Gotham City issues new report

Shares of technology services company Kyndryl Holdings KD.N fall 14.5% to $29.13

Short-seller fund Gotham City Research issues report saying KD manipulates reported adj. EBITDA and adj. free cash flow to artificially give the appearance that it generates profits and cash flow; while in reality, KD generates losses and burns cash

Says have identified accounting and disclosure irregularities regarding KD's reported 2019-2023 payments to IBM IBM.N

"KD reports $1,382 mln as its 6-month, 9-month, and 12-month related party cost of services figure (how much it pays to IBM). We find this highly confusing and suspect," says Gotham City Research

Says "KD discontinued reporting its IBM costs since 2023, despite the fact that IBM has been Kyndryl's largest supplier"

Kyndryl did not immediately respond to a Reuters request for comment

Shares had risen 66.5% in 2024