So, UPS is dumping Amazon like a bad Tinder date? Fine, whatever. They announced earlier this year they were gonna slash their Amazon business in half, and now everyone's patting them on the back because their earnings beat expectations. Give me a break. Beating expectations these days is like winning a participation trophy. This Controversial Decision Is Already Paying Off for UPS Stock
Shares of UPS have been tanking this year, down 25% even after this supposed "good news." And they want us to believe that ditching one of the biggest e-commerce companies on the planet is the magic bullet? Color me skeptical.
Okay, so the logic is that Amazon business was low-margin, and by focusing on "higher-margin work," they're gonna rake in the dough. Yeah, I've heard that song and dance before. It's the corporate equivalent of saying "I'm not breaking up with you, I'm just...strategically repositioning our relationship." CEO Carol Tome is calling it "executing the most significant strategic shift in our company's history." Translation: "We messed up, and now we're trying to spin it as a brilliant master plan."
They're cutting costs, too, of course. Laying off 20,000 people back in April, a number that's apparently ballooned to 48,000 now! That's 48,000 families wondering how they're gonna pay the bills so UPS can goose its stock price. And offcourse, they blame tariffs and "broader restructuring." Classic.
But here's the question no one seems to be asking: what is this "higher-margin work" they're chasing? Are they going after luxury goods? Shipping diamonds in velvet-lined boxes? Because last I checked, the volume is where the money's at in logistics, and Amazon provides a hell of a lot of volume.
And let's not forget the elephant in the room – or rather, the plane in the warehouse. A UPS plane crashed in Louisville earlier this month, killing and injuring dozens. The NTSB found "fatigue cracks" in a key part of the engine. Fatigue cracks! On a cargo plane! UPS Stock Dives as Fatal Crash Investigation Points Finger at ‘Fatigue Cracks’
Now, I'm not saying this is directly related to their cost-cutting measures, but come on. When you're squeezing every penny, corners get cut. Maintenance gets deferred. Safety margins shrink. It's just basic cause and effect. And while the company is keen to announce the dividend ($1.64 per share), is there anything more important than safety?
Shares dived after the crash, and rightfully so. A brand built on reliability and speed is now associated with tragedy and negligence. That's a PR nightmare you can't just fix with a dividend announcement.
Speaking of dividends, UPS is touting its 7% dividend yield like it's some kind of irresistible lure. Sure, a fat dividend is nice, but it's also a way to keep investors from looking too closely at the underlying problems. It's like putting lipstick on a pig – it might look a little prettier, but it's still a pig. Plus, the stock's trading at a P/E multiple of under 13, way below the S&P 500 average. Translation: Wall Street ain't exactly buying what they're selling.
Maybe I'm wrong. Maybe Carol Tome is a logistics genius, and I'm just a cynical jerk sitting behind a keyboard. Maybe this Amazon divorce will turn UPS into a lean, mean, profit-generating machine. But I doubt it.
