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• UPS share price crashed by over 5% in the pre-market session.
• The company’s revenue slipped to $24.9 billion while operating profit fell by 22%.
• UPS’s weak earnings led to a sharp decline in FedEx stock as well.

UPS (NYSE: UPS) stock price plunged by more than 5% in the pre-market after the company published a weak guidance. The shares crashed to a low of $150, the lowest level since November 28 last year. They have pulled back by almost 9% from their highest point this year and by 21% from their highest point in 2023.

UPS, one of the biggest shipping companies in the world, announced a mixed financial report. In a statement, the company said that its revenue dropped by 7.8% to $24.9 billion. Its operating profit also crashed by over 22.5% to $2.5 billion. Some of this performance was because of a $512 million non-cash charge. In a statement, the company’s CEO said:

 

“2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth.”

UPS results confirmed what FedEx said in December when it published weak financial results. Its earnings came in at $900 million as its sales crashed by 2.5% to $22.2 billion during the quarter. Like FedEx, UPS noted that daily volume growth dropped by 7.4%. Its operating margin also narrowed to 8.5%.

UPS is going through a difficult period as volume growth in the US waned because of the relatively high inflation. The company also suffered after a strike forced it to increase its wages in a deal valued at over $30 billion. Part-time workers will earn $21 while full-time ones will make $49 an hour.

Further, the company also experienced higher energy costs as the price of fuel remained at an elevated level. Most importantly, competition has remained high in the delivery industry. For example, Amazon has moved from obscurity to become the biggest player in the industry.

Analysts have been moderately muted about UPS recently. The most recent ratings came from Raymond James and Stifel who maintained their buy ratings. It was downgraded by Daiwa from outperform to neutral.

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