FedEx (FDX), a stock we recently identified as an Icarus, or a potential bubble burster and big time short candidate, plunged nearly 10% in after hours trading yesterday.
Source: Google Finance.
Missed on 1Q 2020 EPS ($3.05 actual vs. $3.16 expected) and revenue expectations ($17.05B actual vs. $17.06B expected)
Company cited weakening global macro environment and trade wars as chief factors.
Trade tensions have been an issue for the company for some time now as management has used this as reasoning for missing on past earnings reports as well (has now missed on 3 of last 5 EPS estimates).
Not the only issue however. Increased competition, rising costs and ending of delivery partnership with Amazon (now a competitor as well) as of August have weighed on the top and bottom lines greatly.
Company also lowered guidance on 2Q and full year 2020 outlook.
Announced increase in shipping prices in January of 2020 by between 4.9% - 5.9% https://www.fedex.com/en-us/shipping/current-rates.html
We see more tough times ahead for FDX. Management wants to focus on trade tensions as the main culprit for the recent struggles, but we view the loss of Amazon’s business and the increased competition from Amazon’s own delivery service as potentially an even greater concern moving forward. On top of that, another competitor, UPS, has kept their business relationship with Amazon alive, for now at least.