Money
UPS shares dive, is eCommerce slowing down?
United Parcel Service shares have plunged to a three-month low
The parcel delivery company has again seen its stock plummet with worries that growth from the pandemic-fueled e-commerce boom may be fading.
The company stated that second-quarter domestic volume fell 2.9%, with ground – composed largely of e-commerce deliveries – dropping 4% compared to the year earlier.
The stock was down 9.3% at $190.32 in midday trading, its lowest price since late April.
UPS has seen the benefits of the pandemic shift to online shopping.
Like rival FedEx, it responded to the boom for in-home delivery demand by adding profit-boosting surcharges.
The share price decline came despite second-quarter profit and revenue that topped Wall Street estimates.
“Investors are likely reading this as an indication the pandemic-driven demand trend is slowing,”
Cowen Research analyst Helane Becker said in a client note.
Executives of UPS have confirmed that domestic package volume could be under pressure in the second half of the year as some shoppers return to in-store shopping.
Since Carol Tomé became CEO in June 2020, UPS has been reining in costs and focusing on high-margin packages under her “better, not bigger” strategy.
During the second quarter, UPS reported growth in lucrative air and healthcare shipments
UPS is reserving planes and other equipment needed for the expected surge.