Stock Market

FedEx shares dropped by 13% before the market opened, while its competitor UPS saw a decrease of 2.5%

FedEx Corp shares experienced a significant drop following a reduction in annual revenue forecast and a significant fall in its profits. 

This decline was attributed to industrial clients opting for more affordable services instead of the more expensive, expedited delivery services.

An increase in borrowing rates and a challenging macroeconomic climate have led consumers to manage their expenses.

FedEx’s Increase in Revenue in 2025

FedEx has anticipated an increase in the revenue of fiscal 2025 to grow by a low single-digit percentage compared with a low-to-mid single-digit percentage growth estimated earlier. It has reduced the top-end of its full-year adjusted operating income to be between US$20 and US$21 per share compared to US$20 - US$22 per share.

FedEx Shares Dropped by 13%

FedEx shares dropped by 13% before the market opened, while its competitor UPS saw a decrease of 2.5%. The company is initiating a detailed reorganization strategy designed to cut billions of dollars in administrative expenses and enhance operational effectiveness.

"The pressure on profitability shows FedEx is still a way off rightsizing its cost base after expanding rapidly to meet extra demand during the pandemic, when demand for shipping increased," AJ Bell investment director Russ Mould said.

FedEx, often viewed as a leading indicator for global trade, announced on Thursday that its earnings were affected by a decline in the demand for high-value business shipments.

Moreover, the CEO of FedEx, Raj Subramaniam said industrial demand was softer than expected.