Sunday , August 7 2022

Stamps.com is breaking up with the US Postal Service, and its stock is nearly 50%



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Stamps.com stock Inc. will take a nose plumbing late on Thursday, reducing almost 50% after the company says that a unique deal with the US Postal Service will not be renewed.

Stampiau.com

STMP, -2.00%

anticipates a huge reduction in its financial performance in 2019 with a fourth quarter earnings report in Thursday afternoon, then explained why in a conference call. Notes the need to work with parcel and other mail carriers such as United Parcel Service Inc.

UPS, + 0.62%

, FedEx Corp

FDX, + 0.20%

and Amazon.com Inc.

AMZN, -0.16%

, the executive said that its customers were asking for shipping options that they needed beyond what the post office could offer, so the unique nature of their agreement was no longer working.

"Our customers can not continue to survive only the USPS, and we do not see that as a practical option over the next five years," said Chief Executive, Kenneth McBride, at the conference. "So, basically, that was our assumption, it's probably, no matter what, this company can not be extraordinary now considering the trends in the ship market."

The company said in its announcement that he expects earnings to be cut by almost half and that sales fell from 2018, partly due to the end of the revenue sharing agreement with the post office. Officials of Stamps.com officers said in the earnings call that the discussions between it and the USPS had broken down on the issue of Stamps.com only selling post office office products. Because Stamps.com insists on having the ability to sell competitors products, the post office said that it would kill the deal.

"The issue that was made to us unless a ban is removed from the board, because we have to embrace other carriers now, we can not afford to remain unique to us. USPS, "says McBride in the demand earnings. "Not only for the best interests of our customers, and if our customers can not get the best solution, do not have the best offer in the market, then they will leave us and in the end, we will not lose anything."

Read: Why was the U.S. Post Service? in CES?

McBride said at the conference that the company had not broken its relationship with the USPS altogether, and it will still sell stamps as well as other services. It is intended that Stamps.com will continue to work with the "post office" in the market segments where they provide a solution that benefits the customer, "he said. As part of the scheme, the company wants to work with carriers like Amazon and others to build a "portfolio" of 40 U.S. carriers, and 450 carriers worldwide.

McBride stated that Stamps.com is closely aligned with e-commerce trends and once it has established agreements with additional carriers, growth and revenue of the company will reflect the e-commerce sector as a whole .

"So, if you look longer, after we have got extra revenue agreements in place, whatever that economy, ultimately, what will the growth and? That revenue is predicted and e-commerce trends will be in line with them, and those are looking to be quite quite systematic, "said McBride at the conference.

Associated: Stamps.com was one of the main small caps for 2019 among Wall Street analysts

The online postal supplies company said that the expected earnings for 2019 were $ 5.15 to $ 6.15, which was a revenue share of $ 540 million to $ 570 million, a large reduction of adjusted earnings of $ 11.78 as a share on revenue of $ 586.9 million in 2018. Analysts on average converted earnings in 2019 of $ 10.79, a revenue share of $ 689.1 million before the Thursday report, according to FactSet.

Stamps.com reported a fourth quarter of $ 42.7 million, or $ 2.30 per share, at revenue of $ 170.2 million, up from $ 132.5 million a year ago. After adjustments for stock-based compensation and other effects, the company claimed earnings of $ 3.73 to a share, knocking too lowly estimating the average analyst, who called for modified earnings of $ 2.90 to a share on sales of $ 160 million, according to FactSet.

Prior to the decrease of Thursday after hours, the Stamps.com stock had won 7.1% in the last year, such as the S & P 500 index

SPX, -0.35%

has risen by 2.7%. His shares have never dropped more than 25.4% in one session.

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