The Dow International Business Machines Corporation (IBM) component is trading down about 3% in Tuesday’s pre-trade session, despite meeting third quarter 2020 earnings estimates Revenue fell 28% from year over year up to $ 17.56 billion, marking the third consecutive quarter of declines, sparking a selling news backlash that offset improving sentiment following the company’s recent news on spin-offs
The old-fashioned tech giant announced on October 8 that it would split the Global Technology Services unit into a separate company, triggering a high percentage rally that took the stock to a four-month high.However, investors had doubts after realizing the deal wouldn’t close until the end of 2021, triggering an exodus that has now thrown IBM shares below the price they were trading at before the news broke This bear trap could weigh on price action in the coming weeks
Revenues for the unit named for the spin-off fell 4% year-over-year, even as the $ 6 billion contribution to revenue exceeds analyst estimates, adding to the pressure at the Decline The company did not offer advice on the release, but targeted « mid-term single-digit sustainable revenue growth » during the announcement Quarterly results will likely reduce confidence in this prediction
Wall Street is skeptical of IBM’s long-term outlook, with a consensus « Hold » rating based on three « Buy, » six « Hold » and one « Sell » recommendations. Price targets currently vary from a low of 115 USD at $ 155, while stock is expected to open Tuesday’s session at just $ 4 above the low target Given this placement, Monday night’s mixed results could trigger further downward revisions and lower price targets
In a demerger, the parent company distributes the shares of the spin-off subsidiary to its existing shareholders on a pro rata basis in the form of a special dividend The parent company generally does not receive any cash consideration for the spin-off Existing shareholders now benefit from holding shares in two separate companies after the demerger instead of one The spin-off is a separate entity from the parent company and has its own management
The stock broke above $ 138 in 1999 after a multi-year uptrend and sold off, entering a volatile trading range with support in the 80s It broke down in 2002, hitting a four-year low in the 1950s a few months later A mid-decade rebound settled below new resistance, before a breakout that stalled below the previous high in 2008 It maintained 2005 support near $ 70 during the economic collapse and rebounded in the new decade, rising to the previous century high in 2010
The rally made impressive gains from a 2013 all-time high of $ 215.82 ahead of a virulent downtrend that widened seven years of highs and lows lower The stock fell to its lowest level in 10 years during the first quarter pandemic sell-off and rebounded, reversing at the 200-month exponential moving average (EMA) in June He turned the tail at this formidable barrier a second time after the spin-off news, indicating that the downtrend remains fully intact.
Short-term support near $ 116 should hold for now, suggesting modest downside potential after Tuesday’s opening bell. Larger scale support is around $ 100, where the lows trendline going back to 2002 comes into play In turn, this predicts that IBM could test the March low, but it is unlikely to break that level in the coming months In addition, interest in buying the spin-off should finally resume its course in the first or second quarter of 2021.
Support, or a support level, refers to the price level at which an item does not fall below for a period of time.The support level of an asset is created by buyers entering the market whenever the asset drops to a lower price
International Business Machines stock is trading lower after another quarter of falling revenue, but near-term downside risk appears limited
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World news – United States – IBM (IBM) reports third consecutive quarter of declining revenues
