Why UPS Stock Is Plunging Today

Core Viewpoint - United Parcel Service (UPS) exceeded fourth-quarter earnings expectations but provided a disappointing forecast for 2025, primarily due to a significant reduction in volume from its largest customer, Amazon [1][3]. Financial Performance - UPS reported earnings of $2.75 per share on revenue of$25.3 billion for the fourth quarter, surpassing Wall Street estimates of $2.53 per share on sales of$25.4 billion [2]. - The company anticipates full-year 2025 revenue of $89 billion, which is notably below the consensus estimate of$95 billion [2]. Strategic Changes - UPS is transitioning its SurePost partnership with the Postal Service in-house, aiming to enhance long-term profitability [3][6]. - An agreement has been reached with Amazon to reduce volume by over 50% by the second half of 2026, which is expected to impact growth negatively in the short term [3][4][6]. - The company is reconfiguring its U.S. network and launching multi-year efficiency initiatives projected to save approximately $1 billion through a comprehensive process redesign [6]. Market Context - Amazon represented nearly 12$91.1 billion revenue in 2024, indicating the significance of this customer relationship [4]. - Since the pandemic, UPS shares have lost about half their value, reflecting a lack of near-term catalysts for recovery [5].