Amazon's Supply Chain Move Causes UPS and FedEx Shares to Plunge
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy UPS?
Source: Newsfilter
- Stock Price Drop: Shares of UPS and FedEx fell 10% during midday trading on Monday after Amazon announced it would open its supply chain network, indicating strong market reaction to this new competitor.
- Changing Competitive Landscape: Amazon's initiative positions it as a major player in the logistics sector, leveraging its fleet of over 100 cargo planes and extensive warehouse network, potentially threatening UPS and FedEx's market share.
- Client Engagement: Amazon's 'Supply Chain Services' has already signed major retailers such as Procter & Gamble, 3M, Lands' End, and American Eagle Outfitters, demonstrating market recognition and demand for its services.
- Growth Strategy: This supply chain opening is part of Amazon's ongoing strategy to expand its service offerings, aiming to enhance its market influence across multiple industries by providing logistics solutions.
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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: 99.890
Low
80.00
Averages
107.06
High
126.00
Current: 99.890
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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- Pfizer's Current Status: Pfizer's stock has fallen about 50% from its 2021 peak, facing competition in the GLP-1 weight-loss market and several patent expirations; however, with a $150 billion market cap and a gross margin of 66.23%, it remains a large pharmaceutical giant, suggesting potential for a rebound for long-term investors.
- General Mills' Challenges: General Mills' stock is down 60% from its 2023 high, impacted by inflation and changing consumer preferences, with organic sales down 3% in the first three quarters of fiscal 2026; however, its 125-year history and strong brand portfolio indicate a likelihood of recovery in the future.
- UPS's Business Restructuring: UPS's stock has dropped over 50% from its 2022 high, as the company undergoes a business overhaul to cut costs and focus on profitable customers; despite short-term revenue declines, rising revenue per piece suggests potential for improved profitability.
- Attractive Dividend Yields: Pfizer, General Mills, and UPS offer dividend yields of 6.5%, 7%, and 6.6%, respectively, providing investors with solid returns while waiting for these turnaround stories to unfold, enhancing their investment appeal.
See More
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- Pfizer Stock Decline: Pfizer's stock has fallen approximately 50% from its 2021 peak, primarily due to overestimated long-term demand for its COVID vaccine, alongside competition in the GLP-1 weight-loss market and upcoming patent expirations; however, with a $150 billion market cap, Pfizer remains a pharmaceutical giant poised for rebound through new drug development.
- General Mills Investment Year: General Mills' stock is down 60% from its 2023 high, impacted by inflation and changing consumer preferences, with organic sales down 3% in the first quarter; yet, the company's strengths in branding and marketing suggest potential for recovery, making it an attractive buy while undervalued.
- UPS Business Overhaul: UPS's stock has dropped over 50% from its 2022 high due to decreased shipping demand post-pandemic, prompting a business overhaul focused on cost-cutting and profitable customer segments; despite short-term revenue declines, rising revenue per piece indicates a shift towards profitability, with 2026 expected to mark a turning point.
- Attractive Dividend Yields: Pfizer offers a dividend yield of 6.5%, General Mills at 7%, and UPS at 6.6%, providing investors with substantial returns while waiting for these companies to recover, highlighting the long-term investment potential of these undervalued stocks.
See More
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- Earnings Decline: UPS reported a Q1 earnings drop to $1.07 per share from $1.49 in 2025, with operating margins falling by two percentage points, indicating challenges during its multi-year turnaround process.
- Cost-Cutting Success: Despite one-time impacts, UPS is successfully shifting its business focus from low-margin, high-volume customers to more profitable ones, demonstrating initial success in its turnaround strategy.
- Revenue Growth: Revenue per piece in the U.S. rose by 6.5%, indicating that while overall revenue decreased, the higher profit margins align with management's turnaround goals, suggesting the company is moving in the right direction.
- Negative Market Reaction: Despite a generally optimistic long-term outlook, UPS's stock is down over 50% from its 2022 peak and nearly 20% in 2026, reflecting market concerns over high energy prices and recession risks.
See More
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- Upcoming Giants: SpaceX, OpenAI, and Anthropic are expected to go public by year-end, with SpaceX's valuation between $1.75 trillion and $2 trillion, while OpenAI and Anthropic are valued close to $1 trillion each, which will heighten market interest in tech stocks.
- Innovative Share Allocation: SpaceX plans to allocate up to 30% of its shares to retail investors, significantly higher than the typical 5% to 10%, aiming to raise $75 billion, which would surpass Saudi Aramco's record IPO.
- Impact of Rule Changes: The Nasdaq's new
See More
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- IPO Filing: Last month, SpaceX confidentially filed for an initial public offering (IPO) with the SEC, planning to kick off its roadshow on June 8 to pitch the stock to institutional investors and analysts, although a specific IPO date has not been set, trading is expected to commence in late June or early July.
- Valuation Target: The company is aiming for a staggering $1.75 trillion valuation, which would make it the largest IPO in U.S. history; however, historical trends indicate that IPO stocks often underperform in their first year, prompting investors to exercise caution.
- Historical Performance Insights: Data shows that since 1980, around 9,300 companies have gone public on the NYSE or Nasdaq, with IPO stocks gaining an average of 19% on their first trading day, yet those with large market values frequently experience sharp declines after initial excitement fades.
- Long-Term Investment Risks: While SpaceX may perform well in the long run, most large IPO stocks historically have underperformed the S&P 500 post-listing, suggesting that investors might be better off investing in an S&P 500 index fund rather than directly purchasing SpaceX shares.
See More
SpaceX Aims for $1.75 Trillion IPO Record
- IPO Market Value Target: SpaceX is targeting a $1.75 trillion valuation for its IPO, which would make it the largest in U.S. history; however, historical data shows that the top 10 IPOs have seen a median decline of 31% in their first year, potentially undermining investor confidence.
- Listing Timeline: SpaceX confidentially filed its IPO paperwork with the SEC last month and plans to kick off its IPO roadshow on June 8, with shares expected to start trading in late June or early July, providing an opportunity to attract institutional investors.
- Historical Performance Warning: Data indicates that seven out of the ten largest IPOs have underperformed the S&P 500 since their listings, with Alibaba's market value of $169 billion at IPO being significantly lower than SpaceX's target, highlighting the risks associated with high-value IPOs.
- Investor Caution Advice: Despite the excitement surrounding SpaceX's IPO, historical trends suggest that investors should be cautious when purchasing high-value stocks, as most similar companies tend to perform poorly post-IPO, recommending that investors wait for more favorable buying opportunities.
See More
