By
Steve Muchoki
April 16th, 2024
It is said that Warren Buffett’s Berkshire Hathway may look into investing in FedEx as a longterm bet.
Berkshire Hathaway‘s wise Warren Buffett keeps the public blind about his plans to buy FedEx. However, the company is undergoing the development of new business strategies.
Buffett Invests with Great Caution
At the beginning of 2019, a famous investor and a skillful business shark – Warren Buffett – said that his mind is in the search of some big company to invest in. During the year 2019, Buffett kept silent about the intrigue, yet his intent to buy a big company didn’t come out of investors minds. We can be sure only about the fact that it certainly won’t be some of your ordinary cryptocurrency firms. Buffett said that cryptocurrency is not something worth investing, because it has no product to show to the venture investors.
People like Roger Ver or Barry Silbert may disagree. However, Buffett is the man of old school and won’t be wasting his time on something that has no clear future or profit model to show. Right now, Buffett is holding a large portion of USD and is not going to invest in anything, considering the deals one by one. Warren is very picky, and FedEx could offer a rich opportunity for him.
FedEx Lost 900 Million in Profits: Could Warren Help Out?
The issue is that the company had a partnership with Amazon which gave approximately 900 million per year in profits. Now, Amazon quit the deal in summer 2019, because they are developing own delivery services. Not only Amazon, but many other large retail vendors in the U.S. are using their resources to deliver products to the client. This slowly decreases the yearly profits, and even the most positive investors are disappointed with the company’s weak strategy.
Quarterly reports sometimes even showed the company has no profits, which is bad when you want to present something to the greedy public. During the year, FedEx stocks lost 5.5% and the total market cap is now at $46,6 billion.
What Things Could Drag Berkshire Hathaway to Invest?
The delivery corporation has an understandable business model. It’s a part of the S&P 500 index and has a good position on the market. The yearly profits are somewhat stable if we won’t count the most horrific investment occasions like with the Amazon partnership cancellation.
The company’s current price reflects only 42% of its biggest historical market capitalization. Furthermore, FedEx is in the historical phase of rebuilding their business. They are actively opening up the new branches, launched a service of express delivery from the warehouse to the client’s doors, and have their engineers working on the artificial intelligence and blockchain implications.
Yep, right now the FedEx corporation is suffering from money losses due to such an extensive rebuilding. But in the longterm, their tactics will lead to an increase in strategic profits. Berkshire Hathaway may be the miracle company helping FedEx care less about money in the harsh times of innovative rebuilding.