FedEx slumps as the carrier beats earnings estimates but says costs tied to increased shipping demand and labor are soaring

• FedEx fell as much as 5.6% on Friday after earnings revealed labor and logistical pressures.
• The US labor shortage has cost the courier on wages and shipping efficiency.
• FedEx's CEO expressed optimism, saying that investments in its delivery network would soon pay off.

FedEx fell on Friday by as much as 5.6% after its latest earnings report revealed labor and logistical pressures eating away at margins, even as the company slightly beat analyst earnings expectations.

The stock slid as the market opened on Friday, immediately falling by over 3%. It continued to fall to an intraday low of $286.52 before paring some losses.

The US labor shortage has cost the courier on wages and shipping efficiency, pushing up labor costs and depressing on-time shipping rates. In response, FedEx said it would boost capex by 20% and open 16 new facilities by the end of the year. In spite of the reopening pressures, the company's sales rose 30% in the fourth quarter of 2020, as delivery demand remained sturdy.

Thursday's reported earnings came in just cents above expectations, leading some analysts - who had become accustomed to consistent overperformance - to describe the results as a disappointment.

FedEx CEO Fred Smith expressed optimism for future quarters, saying that continued strong sales in conjunction with ongoing investments in the firm's delivery network would soon result in better margins.

Shares of FedEx were trading at $291.46 at 2:08 p.m. ET, down 3.79%.