Amazon's New Service Hits UPS Shares Down 9.8%
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy UPS?
Source: Fool
- Stock Reaction: UPS shares fell by 9.8% by 11:45 a.m., reflecting investor concerns over Amazon's launch of Amazon Supply Chain Services (ASCS), which poses a direct challenge to UPS's core markets.
- Delivery Volume Adjustment: UPS plans to reduce its delivery volumes for Amazon by 50% from early 2025 to mid-2026, aiming to optimize profitability, although this may lead to short-term revenue declines.
- Market Threat: Amazon's ASCS will directly challenge UPS's position in the small and medium-sized business (SMB) market, particularly threatening those SMBs that do not sell on Amazon, potentially weakening UPS's pricing power.
- Competitive Pressure: Amazon has established partnerships with large enterprises like 3M and Procter & Gamble, and UPS faces threats not only from Amazon's market share ambitions but also from its robust logistics capabilities.
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Analyst Views on UPS
Wall Street analysts forecast UPS stock price to rise
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 98.070
Low
80.00
Averages
107.06
High
126.00
Current: 98.070
Low
80.00
Averages
107.06
High
126.00
About UPS
United Parcel Service, Inc. is a global package delivery and logistics provider. Its U.S. Domestic Package segment offers a full spectrum of air and ground package transportation services. Its air portfolio offers time-definite, same-day, next-day, two-day and three-day delivery alternatives as well as air cargo services. Its ground network enables customers to ship using its day-definite ground service. Ground Saver provides residential ground service for customers with non-urgent, lightweight residential shipments. Its International Package segment consists of small package operations in Europe, Middle East and Africa, Canada and Latin America and Asia. It offers a selection of guaranteed day and time-definite international transportation services supported by its brokerage capabilities that facilitate cross-border clearance for international shipments. Its supply chain solutions consist of customized third-party logistics and specialized cold chain transportation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Palantir Surpasses Expectations: Palantir reported an 85% revenue growth in Q1, with net income nearly quadrupling year-over-year, and anticipates its U.S. business will double again next year, raising its full-year free cash flow guidance to $4.2 billion to $4.4 billion, indicating strong market demand and growth potential.
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- Amazon's New Logistics Initiative: Amazon announced a new initiative allowing external businesses to utilize its supply chain networks for deliveries, which has raised concerns about increased competition with UPS and FedEx, leading to stock declines of over 10% and 9% respectively, reflecting market apprehension about the new competitive landscape.
See More
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- Oil Price Surge: WTI crude oil prices surged over 4% following exchanges of fire between the US and Iran in the Strait of Hormuz, raising inflation expectations and pushing bond yields higher, with the 10-year T-note yield reaching a five-week high of 4.46%.
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