Well today was a bad day for STMP shareholders. Pitney Bowes, a much larger enterprise than Stamps and one that has shown it’s not worried about margins, offered Stamps’s services for $5/month. Stamps offers theirs at 15.99.
This is an obvious problem, but when you think about the fact that Stamps’s monthly ARPU is around $50, the idea of losing 20% or more to compete on price with Pitney is fairly disheartening. Aside from taking a 20% hit to revenue if that happened, margins would be absolutely wrecked.
The Bezos quote, “Your margin is my opportunity,” certainly comes to mind. Pitney has never been confused with Amazon, but they’re taking a page out of an awfully successful playbook.
I sold all my STMP shares today. Maybe they’ll outcompete Pitney somehow, and the stock will keep doing well for years. But this is truly a game changer. This thing went into my “too difficult” category as soon as I saw the press release. I didn’t want to lose 5-10% in one day on my mid sized position, but I still believe that shedding the question marks and adding where I have conviction is the way to achieve the best results.
Bear