over 2 years ago • 3 mins
FedEx reported worse-than-expected earnings late on Tuesday, even as the US shipping giant uses any means necessary to get your deliveries to you on time.
What does this mean?
You’d think the ecommerce-fueled demand for deliveries would’ve been good news for FedEx last quarter, and you’d be right – if it had been able to keep up. But the company just can’t find enough drivers to deliver all those yoga mats, despite paying some of them 25% more than it did last year and hiring outside transport services to help pick up the slack.
All that extra effort sent FedEx’s costs up around $450 million and its profit down 10% compared to the same quarter last year. And since FedEx reckons those labor shortages will stick around for a while, the company doesn’t have high hopes going forward either: it lowered its profit forecast for the rest of 2021.
Why should I care?
The bigger picture: FedEx has the power.
It’s not all bad news for FedEx: that massive demand means it’s been able to up its prices without losing customers along the way. And the company’s taking full advantage of that newfound “pricing power”: it’s already announced it’ll be bumping up surcharges during the ever-lucrative festive season, and said on Monday it’d be hiking standard prices again in January.
Zooming out: The market’s only growing.
FedEx had better find some new drivers soon, with the company expecting the number of deliveries in the US parcel market to grow 10% a year until 2026. A lot of that uptick is thanks to the ecommerce boom, which FedEx reckons will see companies send out around 100 million packages a day by next year.
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Toast listed on the US stock market on Wednesday, and IPO-starved investors were more than happy to butter up the restaurant tech provider.
What does this mean?
Toast specializes in tech that allows restaurants to take payments, process orders, and track inventory. So it almost goes without saying that the company had a hard time last year, when foodies were swapping eateries for lap trays: Toast’s revenue plunged 80%, forcing it to halve its workforce just to stay afloat. But the company was also shrewd enough to pivot its focus to mobile ordering and contactless payments, and it now works with 78% more restaurants than it did two years ago.
So Toast decided to put that bouncebackability to the ultimate test by listing on the US stock market. And it’ll be glad it did: the company’s initial public offering (IPO) put its valuation at $20 billion – 150% higher than the $8 billion it was marked at last year.
Why should I care?
For markets: IPOs are in a good place.
Toast actually raised the price it would sell its shares on Tuesday after realizing that they were in such high demand, but the company still underestimated how popular they’d be: its stock jumped 63% on Wednesday. That’s an encouraging sign for the rest of this year’s stock market hopefuls: analysts reckon we’re headed into a few months so busy that it’ll tip this year’s number of IPOs into record territory.
Zooming out: Card is king.
It turns out Toast’s contactless tech was just the ticket at a time when no one wanted to handle germ-stained notes. The shift from cash to card is accelerating all over the world, but it’s particularly noticeable in the UK: data out on Wednesday showed Brits made more than 80% of payments using credit and debit cards last year.
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