Despite IBM’s revenue growth, profit has decreased by 19%

April 20, 2021 15:00

Last January, IBM announced mixed results with positive earnings per share, but below-expected earnings. At the close of yesterday’s trading day, IBM’s quarterly results exceeded market expectations.

In these results, we can see that the earnings per share reached was $1.77 dollars with income of $17.73 billion, compared to expected earnings per share of $1.68 and income of $17.33 billion dollars due to the market consensus, thanks to the impulse of their cloud services.

In recent years, this company has been making an effort to renew its business model, betting strongly on a combination of software development and cloud services. This process led IBM to make the purchase of Red Hat for a value of $34 billion, this being its division dedicated to the cloud.

Despite the increase in revenue, we can find a negative note in the profits obtained; between January and March, IBM obtained 19% less profit, reaching $956 million compared to the $1.175 billion obtained during the same period in 2020.

Yesterday, IBM closed with a slight decrease of 0.35% but after these good results, the pre-opening is being positive with increases close to 3%. 

Technically speaking, during the last months, this company has been experiencing an uptrend that has been reinforced by the triple crossing of ascending averages that occurred last March, although the price has a strong resistance at the price level close to the 135 dollars in the green strip.

In the short term, and after these results, it is important to see if the price is able to overcome its current resistance level, since this break would open the doors to a new upward momentum to levels prior to the beginning of the pandemic.

On the contrary, if the price is not able to overcome its current resistance level, we must be vigilant and check if it maintains its current support levels in the average of 18 sessions (black) and 200 sessions (red) since the loss of this second level, would open the doors to a further retracement in search of its uptrend line.

Source: Admiral Markets MetaTrader 5. IBM daily chart. Data range: from December 6, 2019, to April 20, 2021. Prepared on April 20, 2021, at 12:55 CET. Keep in mind that past returns do not guarantee future returns.

Price evolution of the last 5 years:

  • 2020: -6.09%
  • 2019: 17.92%
  • 2018: -25.91%
  • 2017: -7.57%
  • 2016: 20.61%

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