FedEx’s stock had its worst day on record on Friday after the delivery behemoth lowered its projection, fueling concerns about a worldwide downturn and putting even more pressure on its new CEO for a rapid turnaround.

The early data pushed the stock down 21% to $161.02, causing the company’s market capitalization to drop by around $12.5 billion.

The bleak prediction comes amid investor concern that the Federal Reserve’s aggressive rate rises to combat surging inflation risk tipping the economy into recession.

“We assume that headwinds from an inflation-tired US economy, a resource-constrained European economy, and second-order effects from Chinese lockdowns proved too much to overcome,” said Cowen analyst Helane Becker.

The US company joins global logistics counterparts such as Cathay Pacific Airways in Hong Kong and CMA in France in indicating that customers are saving for necessities such as petrol and food ahead of the Christmas season as rising prices discourage casual buying.

United Parcel Service fell 4.5%, XPO Logistics down 4.7%, and e-commerce behemoth Amazon fell 2.1%. The Dow Jones Transportation index lost nearly 5%, while the S&P 500 declined 0.7%.

Analysts also blamed the problems on company-specific issues and errors during the previous few years, increasing pressure on CEO Raj Subramaniam, who was hired in March, to do more to restore investor trust.
“We have observed substantial levels of investor pessimism toward management’s capacity to meet long-term objectives.” With earnings misses like these, pessimism appears to be growing,” Credit Suisse analysts said.
The findings raise “uncomfortable issues about whether the organization is just too complicated and cumbersome to provide good financial performance over the long run,” they say.

FedEx too experienced activist investor pressure as its profitability was harmed by tough competition and slowing growth in parcel volume.

The Memphis-based corporation is also grappling with contractor dissatisfaction after underestimating holiday season traffic last year. Last month, one of FedEx’s major contractors, a Tennessee businessman, put pressure on the company to increase pay. FedEx then severed connections with him and sued him.

FedEx declined to comment on its early results beyond the press statement issued on Friday.

Subramaniam warned on CNBC on Thursday that a worldwide collapse is imminent.

In answer to a query on whether the economy is “into a global recession,” Subramaniam said, “I believe so.” But, you know, these stats don’t look promising.”

The stock’s plunge on Friday outperformed its previous highest one-day percentage decrease of 16.4% on Black Monday in 1987.

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