United Parcel Service Inc (UPS) shares tumbled 5.27% in pre-market trading on Tuesday, erasing initial gains, as investors shifted focus from a strong second-quarter earnings beat to the heavy financial toll of the company’s ongoing strategic overhaul.

The package-delivery giant reported adjusted earnings of $1.76 per share on revenue of $22.83 billion, handily topping Wall Street estimates of $1.66 and $21.86 billion, respectively. UPS also raised its full-year revenue guidance to approximately $91.2 billion, up from a prior forecast of $89.7 billion, and lifted its adjusted EPS outlook to about $7.22. However, the upbeat numbers were overshadowed by the disclosure that cumulative transformation costs have reached $1.8 billion, with $1.2 billion incurred in 2026 alone, including a significant $891 million after-tax charge tied largely to the Driver Choice Program severance.

With the company expecting to exclude between $1.3 billion and $1.5 billion in restructuring charges from adjusted operating expenses for the full year, mounting concerns over near-term profitability pressured the stock. The sell-off reflects a market reassessment of the pace and cost of UPS’s pivot away from lower-margin Amazon volumes and toward higher-value freight and healthcare logistics, even as the company signaled that the worst of the transition may be nearing its end.