Bears Win Big as Stamps.com Gets Cut in Half

STMP is down 84% year-over-year

by Emma Duncan

Published on May 9, 2019 at 10:13 AM

Shipping giant Stamps.com Inc. (NASDAQ:STMP) is getting slammed in this morning's trading, with the shares already down 54.3% at $38.07, fresh off a four-year low of $36.88. This comes after the company lowered its full-year revenue forecast, which is offsetting first-quarter adjusted profit and revenue beats.

Brokerage firm Craig-Hallum quickly downgraded the shares to "hold" from "buy," and hacked its price target to $48 from $125. Northland Capital Markets followed suit, downgrading STMP to "market perform" and cutting its price target to $80. Coming into today, however, analysts were optimistic, with four of five covering firms sporting "strong buy" ratings. 

STMP has struggled this year, unable to regain momentum following its late-February bear gap -- sparked by the company's U.S. Postal Service (USPS) break-up. Over the past 12 months, STMP has shed 84.5%. Today's steep losses are the second worst in the stock's history -- outpaced by just its Feb. 22 plunge of 57.7%.

Bearish traders are likely cheering today's drop. For starters, STMP's Schaeffer’s put/call open interest ratio (SOIR) of 1.74 sits in the 81st annual percentile, showing a rare put-skew among near-term traders. The May 65 put is home to peak open interest of almost 7,000 contracts, and data from Trade-Alert points to mostly buy-to-open activity here.

Plus, short interest grew 12.7% during the past two reporting periods, and now accounts for nearly 19% of the stock's total available float. At STMP's average pace of daily trading, it would take shorts about a week to buy back their bearish bets. These bears are sidelined today, though, with the equity on the short-sale restricted list.


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