TLDR
- FedEx shares fell 6% in premarket trading after reporting Q4 results that beat estimates but provided weak Q1 guidance
- The company expects a $170 million financial hit this quarter due to trade war impacts and tariff rule changes
- FedEx cut Asia-to-US shipping capacity by 35% in early May after new tariff rules crushed demand from China
- The shipping giant provided no full-year sales or profit outlook, disappointing analysts who wanted forward guidance
- Revenue growth is expected at just 0-2% this quarter, with earnings forecast below Wall Street expectations
FedEx stock took a beating in premarket trading Wednesday, falling about 6% after the shipping giant delivered mixed quarterly results. The company beat fourth-quarter estimates but left investors hanging without a full-year outlook.
The earnings report came with some unwelcome baggage. FedEx warned of a $170 million financial hit this quarter directly tied to President Trump’s trade war policies.
FedEx, $FDX, Q4-25. Results:
🔴 -2% Post-Market📊 Adj. EPS: $6.07 🟢
💰 Revenue: $22.2B 🟢
📈 Net Income: $1.65B
🔎 Closed the year strong with $2.2B in structural cost reductions and 10.9M shares repurchased. pic.twitter.com/6vj2ipmxJH— EarningsTime (@Earnings_Time) June 24, 2025
The damage stems from a major change in May. The U.S. ended the de-minimis provision that had allowed packages worth $800 or less to skip duties on goods from mainland China and Hong Kong.
That rule change hit FedEx like a freight train. The company was forced to slash Asia-to-U.S. capacity by a massive 35% in the first week of May alone.
CEO Raj Subramaniam acknowledged the uncertainty ahead. “We’ll see how that evolves; it’s very dynamic,” he said about potential trade policy changes in the coming months.
The trade disruption forced FedEx to get creative with routing. The company is now seeing increased demand on alternative trade routes, including Asia to Europe and Southeast Asia to the U.S.
But those new routes aren’t making up for the lost China business yet. FedEx expects revenue growth of just 0% to 2% this quarter, barely above flat.
Financial Guidance Disappoints
Wall Street had been hoping for more robust growth. Analysts were expecting 0.6% revenue growth for the quarter running through August.
The earnings picture looks equally challenging. FedEx forecast earnings of $2.90 to $3.50 per share for the first quarter, well below the Wall Street consensus of $3.83.
Even more concerning for investors was what FedEx didn’t say. The company chose not to provide any full-year sales or profit projections.
Some analysts had flagged this omission as more important than the actual Q4 results. They wanted clarity on the company’s longer-term outlook given all the trade uncertainty.
FedEx’s first-quarter adjusted earnings per share estimate of $3.40 to $4.00 also came in below the Visible Alpha consensus. This range reflects the uncertainty the company faces navigating the changing trade landscape.
Stock Performance Under Pressure
The stock has been struggling all year. FedEx shares entered Wednesday already down nearly 20% since January 1st.
The latest premarket decline adds to those losses. Investors appear focused on the weak guidance rather than the Q4 beat.
Trade policy uncertainty continues to weigh on the shipping sector. FedEx’s capacity cuts in Asia highlight how quickly companies must adapt to changing rules.
The company’s geographic diversification strategy is showing some early results. Demand on non-China routes is picking up as businesses adjust their supply chains.
FedEx reported that Southeast Asia to U.S. routes are seeing increased activity. The Asia to Europe corridor is also experiencing higher demand as companies seek alternatives to China-U.S. shipping.
The $170 million trade war impact represents a substantial headwind for the current quarter. This figure reflects lost revenue from reduced China shipments and the costs of rapidly cutting capacity.
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