FedEx said a weaker industrial economy produced a “challenging” quarter that caused it to trim its outlook for later this year, a sign of possible cooling in the wider economy.

Analysts sees a potential spinoff of FedEx’s freight business as a possible boost, but the stock is dropping sharply

FedEx stock tumbled after the company reported disappointing earnings and turned in weak quarterly results Thursday and suffered a bevy of price target cuts and downgrades from Wall Street as a result.

FedEx reported revenue of $21.6 billion and adjusted earnings of $3.60 per share, well below our estimates of $22.1 billion, and $4.90, respectively.

Those pressures do not appear to be easing. In its fiscal 2025 first quarter, which ended Aug. 31, FedEx earned $3.60 per share on revenue of $21.6 billion, falling short of Wall Street's consensus estimates for earnings of $4.76 per share on sales of $21.9 billion.

The package-delivery giant said reduced demand for priority services and higher operating costs weighed on results.

FedEx’s results were dragged down by weaker-than-expected demand, particularly in the U.S. domestic package market.