UPS stock sinks after announcing cut to Amazon deliveries
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United Parcel Service will halve its Amazon package volume to bolster its profitability, but the unexpected move sent the stock tumbling Thursday.
Why it matters: UPS gets nearly 12% of its revenue from Amazon deliveries, CEO Carol Tome said on an earnings call.
- "Amazon is our largest customer, but it's not our most profitable customer. Its margin is very dilutive to the U.S. domestic business," Tome said.
The big picture: UPS plans to cut its Amazon volume by more than 50% by the second half of 2026.
- Tome said it was UPS' decision, not Amazon's, "because if we take no action, it will likely result in diminishing returns."
- The lower volume may partly account for the company's disappointing 2025 revenue forecast of $89 billion, which was nearly $6 billion short of analyst expectations, according to Bloomberg.
- UPS expects its U.S. domestic revenue to fall by 2.2% in 2025.
Threat level: UPS investors were not amused.
- Its shares tumbled more than 14% Thursday in what MarketWatch called the stock's worst day ever.
- "This does fit with their strategy of better, not bigger," Stephens Inc. analyst Daniel Imbro told Bloomberg. "But it appears to be a headwind to earnings, given the lack of underlying revenue growth."
The other side: "Due to their operational needs, UPS requested a reduction in volume and we certainly respect their decision," Amazon spokesperson Kelly Nantel said in a statement. "We'll continue to partner with them and many other carriers to serve our customers."
Between the lines: While Amazon delivers many of its packages through its own network, the company still relies on UPS for some of its more complex deliveries.
- "Taking it all in-house would probably require heavy incremental investment, especially given Amazon's own internal peak-season needs," Morningstar analyst Matthew Young said in a recent report.
