Why is FedEx stock rising?

FedEx stock jumped by 3.7% on Friday to close at $238.57 as the stock trimmed its year-to-date decline to around 7.7%. The stock has seen great gains in the month of March as from date 7^th.

January and February saw the FedEx stock take a very sharp drop that made it shed over $60 before getting back to its fit at the beginning of this month (March 2022). So, what is the force behind the current bull market? Will it last?

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This article reflects on the forces behind the current surge in FedEx stock price.

Factors pushing FedEx shares up

·         FedEx reiterated its full-year profit forecast

To start with, FedEx confirmed its full-year profit projection at the beginning of this month; something that boosted investors’ perspective about the stock since if the stock was to hit its target, investors could earn as much as $20.50 to $21.50 per share.

This is the main reason why the stock stopped dipping and started rising at the beginning of the month.

·         Raj Subramaniam to replace Smith as CEO in June

Yesterday (Tuesday, March 29, 2022), the momentum of the bullish trend accelerated the company revealed on Monday that the group’s chief operating officer, Raj Subramaniam, would replace the longtime boss and company founder Fredrick Smith as the CEO on June 1, this year.

Smith founded FedEx in 1973 with only 14 planes and less than 400 employees at the time. At the time of his exit from the CEO’s position, he shall leave the company with 650 planes, the world’s biggest air cargo fleet, and a staff of more than 600,000.

Smith shall serve as an executive chairman of the group once he leaves his CEO position.

Subramaniam has been the backbone of FedEx’s supply chain and is expected to steer the company through many of the same challenges that Smith had to deal with; major among them being investors looking for a profit margin improvement in the FedEx Group Division, which continues to face stiff completion from rival United Parcel Service  (UPS).

·         FedEX’s plan to use autonomous trucks

In an interview on “Mad Money” with CNBC’s Jim Cramer, FedEx CEO and founder Fredrick Smith said that the company will make huge steps in its autonomous vehicle efforts this summer.

Smith said:

“You’ll see in late June an enormous effort towards autonomous trucks that move over the highway. Not in the city, where we think our drivers are better for the pickup and delivery of the long-distance vehicles… We are a long way down the road to doing that. But we’re not going to get rid of our drivers. They’ll do the pick-up and delivery and the dredge, if you will, and over time, I’m very confident autonomous trucks are on the way.”

In late 2021, FedEx had announced that it was testing autonomous delivery trucks in China in partnership with Neolix, a self-driving logistics company based in China. Besides Neolix, FedEx has also launched other autonomous vehicle usage in partnership with Nuro, Aurora, DEKA Development Research, and Paccar.