Please ensure Javascript is enabled for purposes of website accessibility

Why Stamps.com Inc. Stock Fell 15%

By Daniel Sparks - Apr 28, 2016 at 12:55PM

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

An article about Stamps.com, full of negative language and bearish assertions, has shares trading lower on Thursday.

What: Shares of Stamps.com (STMP) were hit hard on Thursday following a bearish Seeking Alpha article, which asserted the stock has significant downside. The stock fell as much as 15%, and is down 10.9% at the time of this writing.

Image source: Stamps.com.

So what: A Seeking Alpha author named The Friendly Bear says the column's material specializes in "dumpster diving for hidden litigation." In this report, The Friendly Bear claims Stamps.com has refused to disclose investigations from "multiple government authorities for false and misleading advertising practices."

The article cites other problems, including "a busted business model," new competition aiming specifically at Stamps.com customers, and "a flawed M&A strategy."

The Friendly Bear believes Stamps.com stock has "at least 50% downside in the near-term and 75% downside in the longer-term."

Now what: While the Seeking Alpha article may be worth a read, investors should tread carefully, conducting their own due diligence to double check any unverified facts or claims.

The company reports first-quarter results on Monday, May 9, and will conduct a conference call on the same day, at 4:30 p.m. ET, to discuss results. Perhaps management will address these issues during the call.

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

Stamps.com Inc. Stock Quote
Stamps.com Inc.
STMP

*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 service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

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.