Please ensure Javascript is enabled for purposes of website accessibility

Deja Ouch All Over Again: Why Got Stomped on Thursday

By Motley Fool Staff – May 15, 2019 at 12:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

For the second time this year, the share price was halved in a single day.

Here's a simple recipe for a share price beatdown: Cut your earnings guidance not only for a single year, but for the next three, just to make it clear that whatever your turnaround plan is, you don't think it's going to show results anytime soon. That was what (STMP) did on Thursday, and by the end of the day, a stock that had been trading at $200 just three months ago was down to $38.

In this segment from Motley Fool Money, host Chris Hill and senior analysts Ron Gross and Jason Moser dig into the strategic shift the company is making by taking a step back from the U.S. Postal Service, its long-term goals, and whether the pain will be short-term or not.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

This video was recorded on May 10, 2019.

Chris Hill: In late February, shares of were cut in half in a single day. That happened again this Thursday, when the company cut its earnings guidance for 2019 as well as 2020 and 2021. Ron, in less than three months, this stock has gone from $200 to $38.

Ron Gross: Brutal, and perhaps not getting any better anytime soon. They're claiming that the non-negotiable item for them was to no longer be the exclusive partner of the United States Postal Service, because they wanted ability to tap Amazon, FedEx, UPS. But that's just destroyed this business. Now, they're claiming that's a short-term pain, and once they can get into deals with those folks, they'll be able to offer multi different shipping arrangements to their customers, especially some of the smaller customers that use, and they'll be fine in the mid to longer term. That remains to be seen. The pain they're seeing now is due to the renegotiations with all these different customers. I think it's going to be painful for quite some time. I think perhaps they might never turn.

Hill: From a negotiating standpoint, shouldn't we be betting on all these other huge companies like FedEx and Amazon, now that is much smaller than it was three months ago?

Gross: It's a formidably competitive area.

Jason Moser: I think that's a reasonable bet. I mean, you know that commercial where they spend the first 30 seconds trying to explain to you why their name is, even though they don't really sell overstock goods? I mean, I feel like is running into that brick wall as well. I don't know why the company is called at this point, because they're not really in the business of selling you stamps. They're trying to figure out where to take this business. It'll be a big branding problem going forward.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Hill owns shares of AMZN. Jason Moser owns shares of AMZN. Ron Gross owns shares of AMZN. The Motley Fool owns shares of and recommends AMZN, FDX, and The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned Inc. Stock Quote Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.