Shares of United Parcel Service, Inc. skyrocketed as much as 40 percent in the company’s first day of trading today, raising $5.47 billion (US$) in the largest initial stock sale in history.
Many industry observers feel that the price of UPS’ stock is being driven through the stratosphere because the company is in a unique position to cash in on the delivery needs of the thousands of online merchants in the burgeoning e-commerce economy.
However, Joseph Marino, an analyst with Sterling, Virginia-based Current Analysis, Inc., told the E-Commerce Times that he is not so sure.
“I’m reserving judgment whether this is the reason for the rise of UPS’ stock,” he said. “Since the company has been closely held, we know very little about their e-commerce plans. But we do know they’re a very well run company and certainly have the infrastructure for such deliveries.”
Marino added that Federal Express already had its online delivery program in place in order to cash in on the upcoming e-commerce holiday rush.
“They’re definitely going to be one of the long-term big players,” he said.
According to Marino, as e-commerce grows, we can expect more and more traditional transportation companies to be lured into providing e-tailers with reliable delivery services.
Through The Roof
Meanwhile, UPS’ stock climbed from 19 7/8 to 69 7/8 on the New York Stock Exchange in late morning trading after briefly hitting $70. About 58 million shares changed hands — the most ever on U.S. exchanges.
Yesterday, the company sold 109.4 million shares at $50 each.
“Our goal is to remain the pre-eminent global company in our industry in the 21st century,” said UPS Chairman and CEO Jim Kelly. “By having available a publicly traded equity security, UPS will be able to take advantage of opportunities around the world to grow its business. The decision to go public reflects our willingness to embrace change, something UPS has done repeatedly since being founded as a messenger company in 1907.”
The offering was led by Morgan Stanley Dean Witter, and co-managed by Goldman Sachs, Merrill Lynch, Credit Suisse First Boston, Salomon Smith Barney and Warburg Dillon Read.
Atlanta, Georgia-based UPS is the world’s largest express carrier and largest package delivery company. It serves more than 200 countries and territories.
In 1998, UPS generated revenues of $24.8 billion from the delivery of more than three billion packages and documents worldwide. The company employs more than 330,000 people and serves 1.7 million regular daily shipping customers worldwide.