Yahoo Finance Why Stamps.com Stock Just Popped 10%
What happened
All of last year, Stamps.com (NASDAQ: STMP) was dogged by investor worries: Would the company become collateral damage in President Trump's ongoing feud with Jeff Bezos, the owner of The Washington Post and founder and CEO of Amazon.com (NASDAQ: AMZN)?
Today, Stamps.com stock is soaring -- 10.4% as of 1:45 p.m. EST -- as investors believe they have gotten their answer: a (qualified and preliminary) "no."
Who would have guessed that investing in "Stamps" could be so exciting? Image source: Getty Images.
So what
On Wednesday, the U.S. Department of the Treasury released its long-awaited "Task Force report on the United States Postal System" containing suggested reforms. (The reaction is only happening today because Wednesday was a market holiday).
Within this report, the Treasury recommends several actions aimed at correcting the Post Office's "unsustainable financial path which poses significant financial risk to American taxpayers" -- and a total of $69 billion in accumulated losses over the period from 2007 to 2018. These actions include such inoffensive measures as improving "governance," defining "essential postal services," and modernizing the Post Office's "cost allocation methodology."
They include actions of more concern to shippers that use the Post Office for delivering packages -- such as Amazon: "Developing a new pricing model that removes price caps and charges market-based prices" could raise those companies' costs.
Now what
The Treasury's Task Force report does not, however, appear to include any recommendations that seem clearly aimed at hurting Stamps.com's business -- with the possible exception of a vague recommendation to "pursue cost-cutting strategies." (Potentially that could affect Stamps.com, if one strategy pursued is to cut the amount that Stamps.com takes when it sells postage online.)
Aside from that unhappy outcome, though: If USPS ends up raising prices on postal shipments, then any percentage that Stamps.com takes for selling postage on those packages could increase in terms of dollar value to Stamps.com. Between that prospect, and the lack of any clear and present danger to the business in the task force's report, I'd say Stamps.com investors are right to be happy today.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith owns shares of Stamps.com. The Motley Fool owns shares of and recommends Amazon and Stamps.com. The Motley Fool has a disclosure policy.
