Following the release of preliminary results for fiscal Q1 on Friday, the company’s shares fell by 24 percent, reducing the company’s market cap by $12.5 billion.
According to the analysts, the drop was mainly due to the bleak outlook for 2023, the difficult economic conditions worldwide, including the inflation-plagued US economy, resource-constrained European economy and China’s lockdowns simply causing too much trouble for the company.
With that complain about the deteriorating economic circumstances, FedEx joins to Hong Kong and France-based global shipping companies which have already indicated that consumers have started saving in many areas, people are cutting back on their purchases due to rising food and fuel prices, and this has a sensitive effect on business activities.
Major European courier companies such as Deutsche Post or London’s Royal Mail dropped after the disappointing results were publicly announced.
But in the case of FedEx, American analysts have also pointed out company-specific problems, complaining among others about the current management, which has not yet been able to win back investors trust.
FedEx warned in the quarter results that its earnings in August would be about half what analysts were expecting and sales would be about $800 million below the preliminary forecasts.