On Friday, September 16, 2022, FedEx (FDX) pre-announced that it would
miss earnings expectations. It also withdrew its guidance. FedEx lost 21.4%
of its value that day. It sent Nasdaq, the S&P 500, and Dow Jones lower
before those indexes recovered slightly by the end of the day. FedEx is the
proverbial canary in the coal mine. It reflects the economic activity of nearly
all levels. E-commerce firms rely heavily on parcel delivery. The delivery
company’s business update confirms what technology investors feared the most.
The slowdown will continue into the rest of the year. FedEx expects revenue
of $23.2 billion, compared to $22 billion reported last fiscal year. Operating
income will fall from $1.4 billion last year to $1.19 billion in fiscal 2023. Its
diluted income will fall from $4.09 to $3.33. The firm is taking a business
optimization cost of seven cents a share. Its business realignment cost will
remove four cents a share from its earnings for the year. Global volume software
is hurting the firm revenue. This worsened in the final weeks of its quarter. In
Asia, China’s unnecessary zero Covid mandate weakened the economy in the
region. In Europe, energy prices will keep rising. FedEx is warning investors
that Europe and China remain high-risk investment areas.