Kyndryl Holdings (KD) shares showed tentative signs of stabilization in premarket activity Tuesday, rising 0.4% to $10.63. This minor uptick follows a catastrophic trading session on Monday where the stock plummeted 54.9% to close at $10.59 on explosive volume of approximately 61 million shares.
Regulatory and Internal Control Issues Prompt Filing Delay
The company disclosed it will delay its quarterly Form 10-Q filing for the period ended December 31. In a regulatory notice, Kyndryl cited an ongoing audit committee review of its cash-management practices and related disclosures, initiated partly in response to voluntary document requests from the SEC's Division of Enforcement. The firm also warned it expects to report "material weaknesses" in its internal controls over financial reporting and advised investors not to rely on its prior internal-control assessments.
Management Shakeup and Analyst Downgrade
Amid the turmoil, Kyndryl announced the exits of Chief Financial Officer David Wyshner and Global Controller Vineet Khurana. Harsh Chugh and Bhavna Doegar have been appointed interim CFO and interim corporate controller, respectively. The leadership changes prompted J.P. Morgan to downgrade the stock to "underweight," characterizing the CFO's departure as "stunning" and warning it could stall the company's turnaround efforts.
For its most recent quarter, Kyndryl reported revenue of $3.86 billion, a 3% year-over-year increase, with adjusted earnings of $0.52 per share. Notably, revenue from hyperscaler alliances surged 58% to $500 million. However, management revised its fiscal 2026 guidance, now projecting a constant-currency revenue decline of 2% to 3% and free cash flow between $325 million and $375 million.
The confluence of a delayed filing, regulatory scrutiny, material control weaknesses, and sudden executive departures has shifted market focus. Investors are now viewing the stock less as a pure IT services play and more through the lens of corporate governance and uncertainty. Traders are keenly awaiting the overdue 10-Q, which the company has stated will include details on a remediation plan and a timeline for concluding the internal review.
