This morning, Reuters reported that the Trump administration has begun the process of withdrawing the United States from the "Universal Postal Union," an international organization "that connects postal services worldwide," and that the administration argues enables foreign postal services (read: China) "to take advantage of cheap shipments to the United States."
Investors are interpreting this move as bad news for Stamps.com, and shares of the online postal services facilitator are down 8.3% as of 2:35 p.m. EDT in response.
Why this is bad news for Stamps.com, however, isn't crystal clear.
According to the administration, UPU rules on postage currently allow Chinese retailers to ship small packages to the U.S. at rates 40% to 70% cheaper than what a U.S. retailer would pay. Withdrawal from the UPU, therefore, can be expected to raise shipping rates, and the gross amount of money spent on shipping in the U.S., by about $300 million. Ordinarily, one might expect an increase in spending on postage to be good news for a company like Stamps.com, which makes most of its money from taking a cut of the cost of postage it sells. Logically, the more expensive that postage is, the more money Stamps.com should make.
Moreover, withdrawal from the UPU isn't even certain to happen. The administration could be using the mere threat of withdrawal to pressure the UPU into negotiating higher rates on packages shipped from China. According to White House spokeswoman Sarah Sanders, "If negotiations are successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU."
If you ask me, therefore, today's sell-off in Stamps.com stock is an overreaction to an event that might not happen, and that if it does happen, could actually be good news for Stamps.com stock. Either way, it's probably not a good reason to sell.