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Why FedEx Has Lost ~40% of Its Market Value in the Last Year

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FedEx’s stock performance

FedEx (FDX) stock has fallen ~40% in the last year. Shares of the delivery giant touched a 52-week high of $266.67 on June 12, 2018, and a 52-week low of $150.68 on June 3, 2019.

The plunge in FedEx stock has been much higher than the fall of 10.5% in the iShares Transportation Average ETF (IYT). The ETF allocates its funds to the US transportation stocks listed on the Dow Jones Industrial Average. FedEx has also underperformed its top peers. Shares of United Parcel Service (UPS), Saia (SAIA), and C.H. Robinson Worldwide (CHRW) have fallen 19.7%, 30%, and 8.8%, respectively.

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Numerous headwinds

Over the last year, multiple headwinds have been weighing on FedEx stock. The primary factor responsible for the plunge in the company’s stock price has been its reduction of its fiscal 2019 EPS guidance twice in three months. FedEx’s dismal results in two of the last three quarters have also hurt investors’ sentiments.

Further, US-China trade war escalations have kept US markets highly volatile over the previous year, pushing them mostly downward and affecting FedEx. During its fiscal 2019 second- and third-quarter conference calls, the company revealed that the ongoing trade tussle between the world’s two largest economies had affected its business, mainly in China.

FedEx’s bottom line results have also been affected by increased costs due to higher TNT Express integration expenses, salaries and bonuses, and facility upgrade investments. Additionally, investors are concerned about FedEx’s management reshuffle in the last six months. Two key executives—David Bronczek and David Cunningham—have left the company since December.

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