UPS shares hit three-month low on worries ecommerce is cooling

Price fall comes despite second-quarter profit and revenue topping estimates

A UPS customer service centre in San Francisco. Photograph: David Paul Morris/Bloomberg

A UPS customer service centre in San Francisco. Photograph: David Paul Morris/Bloomberg

 

United Parcel Service shares fell to a three-month low on Tuesday on worries that growth from the pandemic-fuelled ecommerce boom may be fading.

The company said second-quarter domestic volume fell 2.9 per cent, with its ground division – composed largely of ecommerce deliveries – dropping 4 per cent compared with a year earlier.

“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.

The stock was down 8.8 per cent, at $191.21, in early trading, having hit a low of $191, its lowest since late April. It rallied in the afternoon to trade at $194.73 late in the session.

UPS has been a key beneficiary of the pandemic shift to online shopping. Like rival FedEx, it responded to the surge in home delivery demand by adding profit-boosting surcharges.

The share price decline was despite second-quarter profit and revenue that topped Wall Street estimates.