As a reliable and sought after provider of shipment services, FedEx’s stock has been on a steady rise for the past several years, and it reached heights of over $286 per share in March of 2021. However, in the past few months, the stock has seen a downward trend as the company has had to grapple with rising postage rates and the pandemic’s effects on the global economy. But is this a temporary slump in FedEx’s long-term uptrend, or something more?
One of the biggest issues for FedEx is the pressure from rising postage rates. The Postal Service, which is the most commonly used shipping service for households, has had to raise its prices in order to keep up with the growing costs. While some companies are able to negotiate discounts with the Postal Service, FedEx does not have that luxury. This has created a competitive disadvantage for FedEx, as customers are more likely to opt for the cheaper postal service instead of FedEx.
Furthermore, the pandemic has had a huge toll on the global economy, with many companies cutting back on spending. This has meant fewer shipments for FedEx, which is a huge part of their revenue. To counteract this, FedEx has started to shift more of its focus to its logistics services, which requires more data-driven decisions in order to be successful. However, this is a long-term solution that may not pay off until the economy recovers.
In addition, investors are also concerned about the recent announcement from Amazon that they are now providing their own shipping services. While this may help Amazon reduce their shipping costs, it could be detrimental to FedEx, who relies heavily on Amazon’s business.
Given these factors, investors should be looking closely at the future of FedEx to determine if the company is in for a long-term slump or not. The company will need to be proactive in finding solutions to their issues, while keeping an eye on the competition in order to remain competitive. For now, the stock is still on an overall upward trend. But investors should still be closely monitoring the situation, as even a few negative developments could mean major losses for the company.