It feels like just yesterday everyone was talking about "Big Brown" as the unstoppable engine of the pandemic economy. Packages were flying everywhere. If you owned the stock, you were basically printing money. But then the vibes shifted. Hard.
If you’ve looked at your portfolio lately and wondered why did ups stock drop so aggressively over the last year, you aren’t alone. Honestly, it’s been a bit of a car crash in slow motion. Since hitting those dizzying highs around $230 back in early 2022, the stock has been on a downward slide that has left even seasoned investors scratching their heads. As of mid-January 2026, we’re seeing shares hovering in a range that would have seemed impossible three years ago.
So, what gives? It’s not just one thing. It’s a messy cocktail of labor disputes, a nasty breakup with their biggest girlfriend (Amazon), and a global economy that’s acting... well, weird.
The Amazon Breakup No One Saw Coming (But Should Have)
Let’s talk about the elephant in the room: Amazon. For years, Amazon was UPS's best customer and its biggest looming threat. It was a "can't live with 'em, can't live without 'em" situation.
Well, UPS finally decided they could live without them. Or at least, with a lot less of them.
Management basically sat down and realized that while Amazon brought in massive volume, the profit margins on those packages were razor-thin. It’s like having a friend who always wants a ride but only offers to pay for the gas once every three trips. CEO Carol Tomé hasn't been shy about this. She’s pivotting the company toward "better, not bigger."
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The plan? UPS reached an agreement to slash its Amazon volume by more than 50% by June 2026.
Investors freaked out. The logic is sound—focus on high-margin healthcare and small business shipments—but Wall Street hates seeing a revenue hole that big. When you tell the world you’re walking away from billions in revenue, even if it's "bad" revenue, people get jittery. It's a huge gamble on whether the new, smaller, "higher quality" UPS can actually make up the difference.
Why Did UPS Stock Drop? The Teamsters Bill Is Due
Remember that huge sigh of relief back in 2023 when the Teamsters strike was averted? Everyone celebrated because the trucks kept moving. But there was a massive price tag attached to that peace treaty.
The new labor contract significantly boosted wages and benefits for drivers. We’re talking about veteran drivers potentially hitting $170,000 in total compensation by the end of the deal. That is great for the workers—honestly, they earn every penny—but it’s a massive headwind for the bottom line.
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- Higher fixed costs: Those wages don't go down if package volume drops.
- Margin squeeze: UPS has to find a way to pass those costs to customers who are already feeling the pinch of inflation.
- Operational drag: Every time a competitor like FedEx finds a way to squeeze their non-union contractors a little harder, UPS looks more expensive by comparison.
The Economy Is Just... Soft
You can’t talk about shipping without talking about the people buying the stuff being shipped.
Geopolitical tension and those pesky tariffs have made everyone cautious. In late 2025, consolidated volumes fell by nearly 10% in a single quarter. That’s a massive hit. When people stop clicking "buy" on the latest gadget because they're worried about a recession or a price hike due to new import taxes, UPS feels it instantly.
The "Efficiency Reimagined" plan is supposed to fix this. UPS is closing 73 facilities and trying to automate everything that isn't nailed down to save $3.5 billion. It sounds good on a PowerPoint slide, but in the real world, facility closures are messy and expensive.
The Dividend Dilemma
Here is the part that’s actually kinda scary for the "buy and hold" crowd.
UPS has a legendary 16-year streak of raising its dividend. It currently yields north of 6%, which looks juicy. But—and this is a big "but"—the company is currently paying out more in dividends than it’s actually earning in free cash flow.
In the first nine months of 2025, they generated about $2.7 billion in free cash flow but paid out over $4 billion in dividends. You don't need a math degree to see that the math isn't mathing. If earnings don’t rebound fast in early 2026, that dividend might be on the chopping block. And if a "dividend king" cuts its payout? The stock usually falls off a cliff.
Is the Bottom Finally In?
It's not all doom and gloom. Some analysts are starting to call this a "reversion to the mean" story.
The stock is trading at a significant discount compared to the rest of the market. If you believe Carol Tomé can pull off the shift to healthcare logistics—where the money is actually good—then this might be the buying opportunity of a decade. UPS recently acquired Andlauer Healthcare Group for $1.6 billion to speed this up. They aren't just sitting on their hands.
But let’s be real. The road to June 2026 is going to be bumpy. Between the Amazon exit, the high labor costs, and a global economy that’s currently holding its breath, the "why" behind the stock drop is a complex mix of transition pain and macro-economic reality.
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Next Steps for Investors:
If you are currently holding or looking at UPS, your priority should be the January 27, 2026, earnings call. Specifically, look for two things:
- Free Cash Flow vs. Dividend: Are they still paying out more than they're making? If the gap doesn't close, watch out.
- Volume Trends: Are the non-Amazon volumes actually growing enough to offset the loss? If healthcare and SMB (Small and Medium Business) shipping isn't growing by double digits, the strategy might be stalling.
Keep an eye on the debt-to-capital ratio, which has crept up to around 61%. This limits their ability to keep buying their way into new markets. For now, it’s a waiting game to see if "Better, Not Bigger" is a real strategy or just a fancy way to say "We're Shrinking."