IBM employees watch $400 million vanish as stock hits worst day — a reminder about holding too much company stock While the SpaceX IPO turned thousands of current and former employees into millionaires (1), not every staff shareholder story has the same happy ending.
Take, for example, the workers at another tech giant who are now facing collective losses of an appalling $400 million because of their company’s struggles
IBM (IBM:NYSE) may be one of the most established names in the technology sector, but that doesn’t make it immune to the fluctuations of the ever-mercurial market. In fact, its decades-long legacy as an enterprise software giant may have indirectly had a hand in its stock price plummeting by 25% on July 14, marking the worst share day in its history (2). Must Read Unfortunately, with companies rushing to scale AI capabilities amid a components crisis, clients have shifted budgets into chips and associated data center hardware to a level that CEO Arvind Krishna said his team “did (3) not anticipate (3).” In an early second-quarter earnings announcement, IBM reported $12.3 billion in revenue, which was $660 million less than projected, leading to adjusted earnings per share falling 8 cents below expectations.
The stock tumbled more than $73 as a result, spelling disaster for the 150,000 or so employees who hold company shares in their 401(k). The losses amount to some $400 million (4) total; thankfully, it’s not a substantial portion of the $59 billion the IBM 401(k) plan is estimated to be worth, but it’s still significant. It’s also very telling of the dangers of over-investing into any one entity.