Shares of IT services provider Kyndryl fell over 11% on Mar. 27, after short-seller Gotham City accused the company of financial manipulation.

The report claims Kyndryl altered its adjusted EBITDA and adjusted free cash flow metrics to appear profitable despite ongoing losses and cash burn.

It also noted that Kyndryl’s revenue has declined every year, and a more accurate free cash flow calculation shows the company has not generated positive cash flow.

Gotham City further alleged that Kyndryl faces rising costs related to IBM, estimating potential increases of US$1 billion to US$2 billion in the coming years.

The report also accused Kyndryl of accounting and disclosure irregularities concerning payments reported to IBM from 2019 to 2023.

Kyndryl, which was spun off from IBM, has not yet responded to the allegations.