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Why Stamps.com Stock Just Dropped 7%

By Rich Smith - Feb 12, 2018 at 12:45PM

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Amazonian worries could be to blame.

What happened

Shares of postage payment facilitator Stamps.com (STMP) dropped as much as 11% in early trading Monday, before reviving to book "only" a 7.1% loss as of 12:15 p.m. EST. Stamps.com hasn't reported anything noteworthy today, nor are its earnings out just yet.

So what

Instead, I think you can blame Amazon.com (AMZN -5.14%) for this one.

Three months ago, Stamps.com reported a big earnings beat, but said Amazon was bringing some of its "Fulfillment by Amazon" postage billing in-house and that might affect Stamps.com's business going forward. "Fulfillment by Amazon [is] just another one of the carriers that we support," said Stamps.com CEO Kenneth McBride, and so presumably Amazon's move wouldn't doom Stamps.com's business.

A rhinoceros grazing on grass and standing in the crosshairs of a telescope.

Amazon targets companies with big margins -- and Stamps.com may have gotten caught in the crossfire. Image source: Getty Images.

But investors were not reassured -- and sold off Stamps.com stock.

Today, I think Stamps.com's latest sell-off can likewise be traced back to Amazon and its announcement last week that it's launching a "Shipping With Amazon" service to deliver packages for businesses that sell goods on its website -- and eventually for businesses that don't even sell on its website. That news torpedoed the stocks of shipping companies FedEx (FDX -0.16%) and UPS (UPS -1.04%). It only makes sense that it would affect Stamps.com's stock as well.

Now what

Is Amazon trying to drive out of business every other company involved in shipping packages from Point A to Point B? Maybe, maybe not. But one thing's for sure: Amazon.com CEO Jeff Bezos is famous for his mantra:"Your margin is my opportunity."

That makes Stamps.com, which sports a 34.5% operating profit margin, look like a big fat opportunity for Bezos.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$107.40 (-5.14%) $-5.82
Stamps.com Inc. Stock Quote
Stamps.com Inc.
STMP
United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
UPS
$179.92 (-1.04%) $-1.89
FedEx Corporation Stock Quote
FedEx Corporation
FDX
$240.09 (-0.16%) $0.38

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