FedEx shares fall as dismal forecast fans concerns over Trump tariffs

Core Viewpoint - FedEx's shares dropped significantly due to a disappointing profit forecast, attributed to the impact of President Trump's tariffs on global transit [1][3]. Financial Performance - FedEx expects earnings per share of $3.40 to $4 for the current quarter, slightly below the forecasted $4.05 [1]. - The company reported adjusted earnings per share of $6.07 for the quarter ended May 31, exceeding expectations of $5.84 [12]. - Revenue for the same quarter was $22.22 billion, surpassing projections of $21.79 billion [13]. - US daily package volume increased by 6% year-over-year, with US ground home delivery volume rising by 10% [14]. Market Sentiment - The disappointing forecast led to a decline in investor confidence, as FedEx is viewed as a bellwether for various industries [1][15]. - The stock initially fell by about 6% on the day of the announcement [3]. Trade and Tariff Impact - FedEx executives indicated that tariff policies are expected to continue affecting US-China air trade, with the company being more exposed to China compared to UPS [4]. - The tariffs have been reduced from an initial 145% to 30%, but this remains significantly higher than previous rates [4]. - The end of the "de minimis" exemption, which allowed duty-free entry for shipments under $800, is also impacting FedEx's operations [5]. Cost Management - FedEx announced plans for $1 billion in cost-cutting measures for fiscal year 2026, although challenges are anticipated due to ongoing trade unpredictability [11].