UPS Stock Plummets in 2025 Amid 30% Profit Decline and Revised Forecasts
In 2025, UPS shares dropped sharply after reporting a significant profit decline and narrowing revenue outlook, signaling shifts in the shipping industry as post-pandemic demand normalizes.
Key Insights on UPS's 2024 Q2 Performance
- UPS shares experienced a notable decline following a 32% drop in second-quarter profits compared to last year, falling short of analyst expectations.
- Both UPS and FedEx are facing reduced demand as the surge in package deliveries from the pandemic period stabilizes.
- The company has revised its full-year revenue guidance downward and lowered its operating margin forecasts.
In the second quarter of 2024, United Parcel Service (UPS) reported earnings that underperformed analyst projections, reflecting a continued adjustment from the heightened pandemic-era shipping volumes.
Shipping revenue decreased slightly by over 1% year-over-year to $21.8 billion, missing the anticipated $22.18 billion forecast by market analysts, as per Visible Alpha data.
Net income fell more steeply, registering a 32% decline to $1.41 billion from $2.08 billion in the previous year, signaling profitability pressures.
Following the earnings release, UPS stock dropped over 13%, marking its lowest price point since 2020.
UPS Adjusts Revenue Expectations and Relaunches Buyback Program
For fiscal 2024, UPS has tightened its revenue outlook to approximately $93 billion, narrowing the earlier range of $92 billion to $94.5 billion. Additionally, the adjusted operating margin forecast was reduced to about 9.4%, down from the prior 10% to 10.6% estimate.
CEO Carol Tomé highlighted that UPS achieved shipping volume growth for the first time in nine quarters, indicating that the normalization from pandemic-driven peaks is nearing completion for UPS and competitors like FedEx.
She expressed optimism that this volume growth will support profit increases in the latter half of 2024.
The company noted a trend of customers opting for more cost-effective shipping options, such as SurePost, UPS's budget-friendly service targeting business-to-consumer deliveries.
Furthermore, UPS announced the resumption of its stock repurchase program, planning to invest $500 million during the remainder of 2024, with an annual target of $1 billion going forward.
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