FedEx at Forty: Peaks & Valleys

A brief history of FedEx stock.

photograph courtesy FedEx

Federal Express began operations in 1973 but did not become a public company (one that sells stock to the public) until 1978, when it was listed on the New York Stock Exchange and Memphis-based Morgan Keegan executed the first trade.

“We called Fred Smith and said we would like to make the first trade,” Allen Morgan Jr., cofounder of Morgan Keegan, told Memphis magazine. “No one else had called him. We knew it was a hot issue, and we bought as much as we could after it opened. Over the next few years we made a lot of money for our clients, probably ten times their investment between 1978 and 1982.”

There wasn’t nearly as much trading volume in those days as there is today, but FedEx had what Morgan called a “sexy story,” and its clever television advertising campaigns, like the one featuring fast-talking actor John Moschitta, raised its profile. FedEx (trading symbol FDX) was what noted stock picker Peter Lynch of Fidelity Investments called a “ten-bagger.” If you bought it before 1980 and held it until 1995, you made ten times your original investment.

Partly because of the law of large numbers, such gains have not been replicated in the last 20 years. If you bought FedEx in 1995, you had a “five-bagger” in February of this year, when the price was around $106. The all-time high was $121 in 2007. If you bought FDX then, you have a loss.

Like all large companies its age, the FedEx historical stock chart shows high peaks and deep valleys as it fell in and out of favor with investors. The stock has split two-for-one five times, meaning that, for example, if it was $40 and split, the new share price was $20 but the investor had twice as many shares. The stock chart is split-adjusted.

As a capital-intensive company — one that has to spend lots of money on trucks, airplanes, fuel, etc. — FedEx is not much of a dividend play for investors. In 2002 FedEx started paying a dividend, which has grown from .05 percent to .53 percent. That makes the dividend yield roughly half of one percent at recent prices.

The market capitalization — the stock price multiplied by the number of outstanding shares — was around $33 billion in early 2013. The largest individual stockholder is founder Fred Smith, with 19.8 million shares (6.8 percent of the outstanding shares) worth slightly over $2 billion at recent prices. 

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