Why Shares of XPO Logistics Fell in February

What happened

Shares of XPO Logistics (XPO -2.78%) traded down 16.8% in February, according to data from S&P Global Market Intelligence. The shipping company's shares were up as much as 10% for the month until a late February sell-off, dropping nearly 25% as concerns about the COVID-19 coronavirus sent markets tumbling.

XPO data by YCharts

So what

XPO has taken investors on a wild ride over the past few years. The logistics company was a longtime overachiever, with the shares climbing more than 3,000% during a 10-year period ending in mid-2018, but gave up about half of those gains in late 2018 and early 2019 due to criticism from a short-seller and the unexpected loss of a major customer. 

The company's shares had steadily climbed higher over the past year, fueled by improving results that indicated some success backfilling the lost revenue. XPO shares jumped in January after the company announced plans to explore options for many of its businesses, with management complaining that the market was undervaluing the transportation conglomerate.

Image source: XPO Logistics.

The late-February coronavirus sell-off sent the shares back in reverse. Investors are concerned that with economic activity slowed in key regions of the world the transport companies are sure to take a hit in the current quarter, and a prolonged outbreak could eat into full-year results.

Now what

The concerns are legitimate, and XPO and other shippers will almost certainly see a slowdown in volumes from the coronavirus. How much of a slowdown, and for how long, remains an unknown, and investors don't like uncertainty.

XPO's shares are now below where they traded when the company announced its intention to sell assets, and while the coronavirus will affect near-term results it should not lower the value of the assets on the block for a buyer. Be prepared for some volatility in the months to come, but for a long-term investor it's as good a time as any to give XPO shares a careful look.