FedEx Stock Soars on Freight Business Spin-Off Plans

FedEx Stock Soars on Freight Business Spin-Off Plans

FedEx (FDX) shares surged in extended trading on Thursday after the company announced plans to spin off its Freight business into a standalone entity. The separation process is set to begin immediately and is expected to be completed within 18 months.

“We believe this separation will unlock significant value for stockholders,” said FedEx CEO Raj Subramaniam. “The move will also allow both companies to enhance their focus and competitiveness.”

Last week, Citi analysts noted that while a spin-off could unlock value for the Freight business, it might not necessarily be the best long-term strategy.

In its fiscal second-quarter report, FedEx disclosed revenue of $22 billion, slightly below the $22.14 billion analysts had forecast and down from $22.17 billion a year earlier. Net income dropped to $741 million, compared to $900 million the previous year, also missing analyst expectations.

However, after accounting for $249 million in "business optimization costs," FedEx’s adjusted net income rose to $990 million, surpassing the $976.6 million anticipated by analysts.

Following the announcement, FedEx shares climbed approximately 8% in extended trading. The stock had already gained about 9% for 2024 as of Thursday's close.