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Why Stamps.com Stock Popped Today

By Steve Symington - Updated Oct 22, 2019 at 4:00PM

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After nixing its agreement with the U.S. Postal Service earlier this year, a new deal with UPS is exactly what investors wanted to see.

What happened

Shares of Stamps.com (STMP) were up 19.1% as of 3:30 p.m. EDT Tuesday after the internet-based mailing and shipping services company secured a new partnership with UPS (UPS 1.50%).

In a press release from UPS late Monday, it said it will provide Stamps.com's more than 740,000 customers "access to specially discounted UPS shipping rates," as well as "seamless UPS connectivity for e-commerce fully integrated within their familiar Stamps.com platforms."

Close-up of hand putting stamp on a blank white envelope.

Image source: Getty Images.

So what

To be fair, such a collaboration might not seem particularly exciting for Stamps.com investors under normal circumstances. But we should note that even after today's pop, the stock is still trading 55% below its 2019 highs -- a stunning plunge spurred by the company's surprise move in February to end its exclusive partnership with the U.S. Postal Service (USPS) in favor of embracing deals with other carriers like UPS.

"This new collaboration will allow us to bring the leading shipping solutions of UPS to our customer base in a simpler and more seamless fashion, and at very attractive new discounts," said Stamps.com CEO Ken McBride. "We want to empower our customers, and we know that delivery speeds and competitive rates are an important factor for small business success."

Now what

Today's UPS news represents exactly the kind of agreement Stamps.com had in mind when it decided to cut the cord from the USPS. And it's hardly surprising to see the stock rallying in response.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Stamps.com. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Stamps.com Inc. Stock Quote
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STMP
United Parcel Service, Inc. Stock Quote
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UPS
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