FedEx (FDX) shares plummeted 5.44% in Thursday's after-hours trading following the release of its third-quarter earnings report and reduced full-year guidance. The shipping giant's stock decline came as it grapples with ongoing economic challenges and weakening demand in its business-to-business segment.

For the third quarter, FedEx reported adjusted earnings per share of $4.51, falling short of the $4.54 analyst consensus estimate. While quarterly revenue rose to $22.2 billion from $21.7 billion a year ago, exceeding expectations, the company's outlook took center stage. FedEx lowered its full-year revenue forecast, now projecting flat to slightly down year-over-year growth compared to its previous forecast of approximately flat. The company also cut its adjusted earnings per share guidance to a range of $18.00 to $18.60, down from the prior $19.00 to $20.00 range.

FedEx CEO Raj Subramaniam cited a "very challenging operating environment" as a key factor in the company's performance. The revised outlook reflects continued weakness and uncertainty in the U.S. industrial economy, particularly impacting demand for business-to-business shipments. Chief Financial Officer John Dietrich added, "I think it's reasonable to assume that the macro environment is not going to significantly improve, at least through the first half of fiscal 2026." The company is facing headwinds from inflationary pressures and uncertain global trade policies, which have weighed on customer demand.

Despite these challenges, FedEx remains focused on its cost-saving initiatives and transformation efforts. The company is progressing with its planned spin-off of the FedEx Freight division, aiming to streamline its structure and unlock shareholder value. Additionally, FedEx expects to achieve its incremental cost savings target of $2.2 billion for fiscal year 2025 through its DRIVE program.

As FedEx continues to navigate these headwinds, investors will be closely watching the company's ongoing transformation efforts and its ability to adapt to shifting macroeconomic conditions, including potential impacts from tariffs and global trade uncertainties.