News

What Happened?

Shares of parcel delivery company UPS (NYSE:UPS) fell 8.7% in the afternoon session after President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%. From clothing brands and electronics makers to the e-commerce sites that move their goods, companies built on global supply chains took the biggest hit. Stocks with heavy exposure to Asia were especially hard-hit, as the new tariffs threatened the growth and profits of firms with factories in the region. Vietnam, central to many companies' production plans, faced a 46% tariff. Cambodia and Indonesia were also in the crosshairs, with tariff rates of 49% and 32%. These measures could significantly erode the competitiveness of goods produced in those regions. For example, reduced production volumes would negatively affect the sales growth of all companies benefiting from these manufacturing hubs.

The shares closed the day at $100.14, down 9.1% from previous close.

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What The Market Is Telling Us

United Parcel Service’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 2 months ago when the stock dropped 17.6% on the news that the company reported weak fourth-quarter results and provided full-year revenue guidance, which missed significantly. Adding to concerns, UPS announced an agreement with its largest customer to cut volume by more than 50% by the second half of 2026, which might be a headwind to future growth.

On the other hand, it was encouraging to see United Parcel Service beat analysts' EPS expectations this quarter. Overall, it was a worrisome quarter, and the outlook is weighing on shares.

United Parcel Service is down 18.9% since the beginning of the year, and at $100.40 per share, it is trading 34.1% below its 52-week high of $152.27 from April 2024. Investors who bought $1,000 worth of United Parcel Service’s shares 5 years ago would now be looking at an investment worth $1,116.

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