{"id":823213,"date":"2025-01-31T07:11:40","date_gmt":"2025-01-31T13:11:40","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/01\/31\/ups-stock-plummets-15-because-its-about-to-do-a-lot-less-amazon-business\/"},"modified":"2025-01-31T07:11:40","modified_gmt":"2025-01-31T13:11:40","slug":"ups-stock-plummets-15-because-its-about-to-do-a-lot-less-amazon-business","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/01\/31\/ups-stock-plummets-15-because-its-about-to-do-a-lot-less-amazon-business\/","title":{"rendered":"UPS stock plummets 15% because it’s about to do a lot less Amazon business"},"content":{"rendered":"
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In This Story<\/h6>\n<\/section>\n

Shares of United Parcel Service (UPS-14.39%<\/span><\/svg><\/span><\/span><\/span><\/a><\/span>) dropped 15% on Thursday, marking its worst day ever, after the company announced a significant reduction in its business with Amazon (AMZN-0.84%<\/span><\/svg><\/span><\/span><\/span><\/a><\/span>), its largest customer. The move, which will see UPS lower its Amazon-related revenue by more than 50% by the second half of 2026, has rattled Wall Street.<\/p>\n

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While the loss of Amazon\u2019s business might appear to be a major blow<\/a><\/span>, UPS justified the decision as part of a broader strategy to prioritize more profitable deliveries.<\/p>\n

\u201cAmazon is our largest customer, but it\u2019s not our most profitable customer,\u201d UPS CEO Carol Tom\u00e9 said during the company\u2019s Jan. 30 earnings call. \u201cIts margin is very dilutive to the U.S. domestic business.\u201d<\/p>\n

Amazon accounted for 11.8% of UPS\u2019s total revenue \u2013 roughly $10.7 billion \u2013 but its low profit margins have been a drag on the company\u2019s overall profitability. UPS is now focusing on higher-margin opportunities despite the short-term financial hit. <\/p>\n

UPS and Amazon have been partners for nearly 30 years, and Tom\u00e9 stressed that UPS \u201cholds the company [Amazon] in high regard\u201d but that \u201cit was time to step back and reassess our relationship.\u201d The announcement, which left investors unsettled, was coupled with a warning of lower-than-expected 2025 revenue<\/a><\/span>.<\/p>\n

Bernstein (AB+0.89%<\/span><\/svg><\/span><\/span><\/span><\/a><\/span>) analyst David Vernon defended the company\u2019s strategy, arguing the market\u2019s negative reaction was an overreaction. In a research note, Vernon said UPS \u201cdidn\u2019t pull the football, but definitely moved the goal posts,\u201d adding that the shift toward higher-margin operations would ultimately strengthen UPS\u2019s financial health. He maintained a \u201cBuy\u201d rating on UPS with a price target of $179 per share, though he revised his 2025 revenue estimates down by 4-5%. <\/p>\n

UBS (UBS-0.25%<\/span><\/svg><\/span><\/span><\/span><\/a><\/span>) analyst Stephen Ju also weighed in, suggesting that Amazon may be entering a phase of \u201clower capital intensity\u201d in its e-commerce business, which could signal<\/a><\/span> further changes in its relationships<\/a><\/span> with delivery companies. <\/p>\n

Evercore ISI (EVR+1.86%<\/span><\/svg><\/span><\/span><\/span><\/a><\/span>) analyst Jonathan Chappell noted that while UPS\u2019s fourth-quarter results showed positive signs, including stronger-than-expected profits and improved margins in its domestic business, the decision to cut Amazon\u2019s volumes by over 50% was a \u201csurprise.\u201d Chappell added that the move accelerated the decline of a business segment that had long been seen as a \u201ctail risk\u201d for UPS.<\/p>\n

UPS\u2019s big Amazon reduction isn\u2019t all that\u2019s changing. The company also made changes to its UPS SurePost service. Effective Jan. 1, 2025, UPS moved all of SurePost operations in-house<\/a><\/span>, ending its reliance on the U.S. Postal Service for last-minute delivery. UPS explained that the changes to the USPS operating model, which would increase delivery times and raise costs, made the partnership less viable. \u201cThe value proposition of an increased cost as well as deteriorating service didn\u2019t work for us,\u201d Tom\u00e9 said. <\/p>\n

UPS expects to justify the change by focusing more on higher-margin, complex services like its healthcare sector<\/a><\/span>. To offset declining volume, the company closed 11 facilities in 2024, which is expected to save $1 billion.<\/p>\n<\/div>\n

Read More<\/a>
\n Francisco Velasquez<\/p>\n","protected":false},"excerpt":{"rendered":"

In This Story Shares of United Parcel Service ( UPS -14.39% ) dropped 15% on Thursday, marking its worst day ever, after the company announced a significant reduction in its business with Amazon ( AMZN -0.84% ), its largest customer. The move, which will see UPS lower its Amazon-related revenue by more than 50% by<\/p>\n","protected":false},"author":1,"featured_media":823214,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24507,112],"tags":[],"class_list":{"0":"post-823213","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-plummets","8":"category-stock"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/823213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=823213"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/823213\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/823214"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=823213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=823213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=823213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}