FedEx (FDX) shares tumbled 5.47% in pre-market trading on Wednesday, following the company's release of its fiscal fourth-quarter earnings report and disappointing guidance for the first quarter of fiscal 2026. The global shipping giant's outlook reflects ongoing challenges from volatile global demand and the impact of recent trade policy changes.

While FedEx reported better-than-expected results for its fourth quarter ended May 31, with adjusted earnings per share of $6.07 surpassing analysts' estimates of $5.87, investors focused on the company's cautious outlook for the near future. FedEx forecast first-quarter adjusted earnings per share in the range of $3.40 to $4.00, falling short of the $4.06 analysts were expecting. The company also projected Q1 revenue growth to be flat to up 2% year-over-year, citing an uncertain global demand environment.

The disappointing guidance comes as FedEx grapples with the fallout from recent trade policy changes, particularly the end of duty-free status for direct-to-consumer shipments from China. As a result, the company has already cut its shipping capacity between Asia and the Americas by more than 35%. FedEx anticipates that tariffs will add a $170 million cost to adjusted operating income during the current quarter, highlighting the significant impact of trade tensions on its business.

Despite the near-term headwinds, FedEx announced it is targeting $1 billion in cost savings from its transformation programs during fiscal year 2026. However, the lack of full-year guidance, which the company usually provides, has added to investor uncertainty. FedEx CEO Raj Subramaniam acknowledged the challenges, stating, "The global demand environment remains volatile. We're staying close to our customers to help them plan and adapt as they navigate trade policy changes."