A disappointing revenue showing from IBM (IBM) had shares of the tech giant suffering through a dismal trading session Thursday, punishing the stock with an abnormally harsh decline seldom seen in its trading history. It also meant the Armonk, N.Y., hardware and software pioneer is now having the dreariest year of any stock in the 30-member Dow Jones Industrial Average.
Before the New York Stock Exchange opened, IBM slid more than 7% in premarket trading. It's recovered from its worst levels, but recently it was down 6% at $175.53. FactSet data going back to 1984 show 28 times in which IBM has fallen more in a single day, the most recent being April 19 this year, when it dropped 8.3%, also after an earnings-related blow to investors.
IBM 2-Year Chart vs. S&P and Dow
Taking into account all of its trading days on record, the average loss on its down days is only 1.2%, making the selloff five times greater than the mean pullback. Driving the current slide was the latest quarterly report, in which IBM posted a top line of $23.7 billion, roughly $1 billion short of analysts' estimates. It was the third straight sales miss, using FactSet consensus expectations.
About two months ago, Yahoo Finance noted that short-selling interest had started to build around IBM. While only 1.7% of the float is sold short according to the latest available data, the total size of the position has continued to creep up since that August report, reaching 18.5 million shares as of Sept. 30.
Shares of IBM are now down 7.8% for the year to date. That badly trails a 20.1% advance in the S&P 500 and the 17.3% increase in the Dow, of which it's one of the most influential members, owing to its high price level in what is a price-weighted index.
With the dive, it's overtaken Caterpillar (CAT) as the worst performer on the Dow since Dec. 31. The stock closed at an all-time high of $215.90 in March, but from that point, it's lost 18.6%.