FedEx is a delivery company and therefore its heavily tied in with consumer activity, so the performance of the company can viewed as a gauge of consumer appetite. FedEx’s share price suffered greatly in Spring 2020 because of the lockdowns. Prior to the pandemic, the stock was above $165.00, and by mid-March, it dropped below $90.00 – its lowest since level since 2012. The stock underwent a huge rally, and in May 2021 it almost hit $320.00 – a record high. The S&P 500 kept rallying throughout 2021, and it set an all-time high in December last year, so the FedEx share peaked seven months before the wider market.
The pandemic accelerated online shopping which befitted FedEx greatly, but the negative aspects of the lockdowns caught up with the delivery company. In September 2021, the FedEx share price took a knock after the firm revealed a 7% fall in earnings, and the outlook was cut. Staffing shortages and rising costs were cited for the disappointing update. One year later, a similar set of issues are still impacting the company. The wider economic outlook is more downbeat too as high inflation, rising inflation and dwindling consumer confidence are hanging over FedEx.
The FedEx share price rallied in late June when the company posted its well-received fourth quarter results. In the three-month period, EPS was $6.87, fractionally beating the $6.86 forecast, and revenue was $24.39 billion, topping the $24.56 billion consensus estimate. The company issued an upbeat outlook and that lifted sentiment. Raj Subramaniam, the group’s CEO and President said the year’s “financial performance was a result of our team's ability to adapt to a number of unexpected challenges and is a testament to the FedEx value proposition and the execution of our long-term strategy”. The optimism that surrounded the update did not last long as the stock failed to retest the June peak in the weeks that followed the announcement.
In late August, Jerome Powell, the Fed chair, issued a hawkish update at the Jackson Hole Symposium. That triggered a wider sell off in stocks, and that weighed on the FedEx share price. The stock fell to four-month low yesterday. The MACD indicator shows that momentum is in negative territory, implying the bears are in control. While the stock holds below the $210.00 region, it is possible the recent bearish trend will continue. A break below $192.80, could bring $190.00 into play. A rally from here could run into resistance at $210.00, and a break above that level could see it target the $220.00 zone.
FedEx will release its first quarter results on September 22.