Kyndryl (US:KD) The Motley Fool·2025-03-27 18:39Core Viewpoint - Kyndryl Holdings is facing allegations from Gotham City Research regarding financial metric manipulation, leading to a significant drop in its stock price [1][3]. Group 1: Company Overview - Kyndryl is a data center business that was spun out of IBM in 2021 and has seen substantial stock performance over the past three years [2]. - The company has been accused of inflating its adjusted EBITDA and free cash flow figures, which may mask significant cash burn [3]. Group 2: Allegations and Market Reaction - Gotham City Research estimates a potential downside of 67% to 100% for Kyndryl shares from current levels [4]. - Following the release of the short-seller report, Kyndryl's shares dropped as much as 15% on Thursday morning and were down 11% by noon [1]. Group 3: Investor Considerations - Investors are advised to consider the motivations behind the short-seller's report, as Gotham has a vested interest in Kyndryl's stock decline [5]. - Kyndryl has previously discussed its evolving relationship with IBM, which could impact future results, indicating that some concerns raised may not be entirely new to shareholders [6].