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Why Stamps.com Stock Is Down 55% Today

Steve Symington, The Motley Fool

What happened

Shares of Stamps.com (NASDAQ: STMP) were down 55.1% as of 11:30 p.m. EDT Thursday after the online mailing and shipping services company announced first-quarter 2019 results and lowered its full-year outlook.

On the former, Stamps.com's quarterly revenue climbed 2% year over year to $136 million, translating to a 51% decline in adjusted (non-GAAP) earnings per share to $1.23. The company didn't provide specific first-quarter guidance with its Q4 report in February -- when it shocked the market by terminating its exclusive relationship with the U.S. Postal Service -- but CEO Ken McBride insisted the quarter was "in line with our expectations in light of our new strategic direction."

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So what

Though we don't normally pay close attention to Wall Street's demands, most analysts were modeling even lower adjusted earnings of $1.07 per share on a 5.6% revenue decline. That said, Stamps.com's per-share earnings were bolstered in part by the company's decision to repurchase roughly 235,000 shares during the quarter for $32 million -- a move management is likely regretting considering today's massive decline.

"During the first quarter we continued to make progress on our efforts to evolve our strategy to more fully embrace a global multi-carrier business model," McBride added.

Now what

Looking to the full year of 2019, however, Stamps.com significantly reduced its guidance to call for revenue of $510 million to $560 million (down from its old range of $540 million to $570 million), and for GAAP net income per share of $1.15 to $2.56 (down from $2.86 to $3.76 previously).

Stamps.com blamed its enormous outlook reduction on potential adverse contract changes -- of which it was previously unaware -- between the USPS and certain strategic partners that are part of the Postal Service's reseller program. That's not a good look for a company that's trying to convince investors it has everything under control. And the stock is responding in kind.

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