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Why Stock Rebounded 10% Today

By Steve Symington – May 10, 2019 at 6:51PM

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It's hard not to bounce after falling so far.

What happened

Shares of (STMP) jumped 10% on Friday. The bounce only partially recouped a staggering 55.8% plunge on Thursday when the company posted decent first-quarter 2019 results -- at least relative to guidance provided in February after it terminated its exclusive relationship with the U.S. Postal Service (USPS) -- but followed with sharp reductions to its full-year outlook.

Hand placing stamp on envelope.


So what

Make no mistake, nothing has positively changed the situation for the online postage and shipping-solutions company in the past 24 hours. There were no new press releases, analyst upgrades, SEC filings, or otherwise positive news that might typically be credited for a pop like this. More than anything, it seems to be a consequence of the stock losing more than half its value in a single trading session for the second time in as many quarters.

Now what

To recap, yesterday, blamed its dismal new guidance on potential contract changes to certain strategic partners who are still part of the USPS's reseller program. It turns out those partners are renegotiating their service agreements with the Postal Service, which believes could negatively impact its respective revenue-sharing agreements starting in the second half of this year. 

If that impact isn't as severe as fears, those opportunistic investors who picked up shares after yesterday's plunge could certainly be happy with their decision. But it would also be hard to blame shareholders who didn't want to stick around after enduring both big post-earnings drops this year.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Motley Fool has a disclosure policy.

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