International Business Machines Corp. (NYSE: IBM) had a rough Halloween week, dropping 7.3% and taking over as the worst performing stock in the Dow Jones Industrial Average index. The drop in Big Blue’s share price means the stock has lost 24.6% of its value for the year to date.
The second-worst Dow stock so far this year is Caterpillar Inc. (NYSE: CAT), down 20.2% followed by DowDuPont Inc. (NYSE: DWDP), down 18.9%, 3M Company (NYSE: MMM), down 18.1%, and The Goldman Sachs Group Inc. (NYSE: GS), down 9.8%. There are 11 of the 30 Dow stocks that trade lower so far in 2018.
The blue-chip index shed more than 580 points last week to close at 25,270.83, up about 2.4% compared to the previous Friday’s close. For the year to date, the index is up 1.8%, trailing the Nasdaq Composite (5%) but leading the S&P 500 (up about 1%).
IBM’s week got off to a rough start Tuesday when the tech giant announced its $34 billion acquisition of Red Hat Inc. (NYSE: RHT). Shares plunged to a new 52-week low on Wednesday.
Red Hat shareholders are receiving a 68% premium to the company’s share price. The stock has never traded at the $190 per share price that IBM has agreed to pay. IBM CEO Ginni Rometty said:
The acquisition of Red Hat is a game-changer. It changes everything about the cloud market. IBM will become the world’s #1 hybrid cloud provider, offering companies the only open cloud solution that will unlock the full value of the cloud for their businesses.
How a company with sales of around $3 billion and profits of around $260 million is going to turn IBM around remains an exercise for the reader.
IBM stock closed at $115.67 on Friday, down about 1% for the day in a 52-week range of $114.09 to $171.13. The 12-month consensus price target on the stock is $155.94 and the forward price-earnings ratio is 8.30.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
