Stamps.com Inc.'s stock took a nose dive in late trading Thursday, which fell almost 50% after the company said an exclusive deal with the US Postal Service will not be renewed.
predicted a large decline in its economic development in 2019 with the fourth quarter revenue report Thursday afternoon, and then explained why in a conference call. Citing the need to work with other parcels and mail carriers such as United Parcel Service Inc.
UPS, + 0.62%
FDX, + 0.20%
and Amazon.com Inc.
said executives that his customers requested and demand shipping opportunities beyond what the post office was able to offer, so that their exclusive character no longer worked.  "Our customers can no longer survive on USPS only, and we do not see it as a viable option for the next five years," CEO Kenneth McBride said in the conference call. "So basically it was our premise, it is, no matter what, this company can no longer be exclusive to the trends in the freight market."
The company said in its announcement that it expects earnings to be chopped almost half and sales to decline from 2018, largely due to the end of the revenue sharing agreement with the post office. Stamps.com executives said in the earnings call that negotiations between it and USPS broke down on the issue of Stamps.com, which only sells post-office shipping products. Because Stamps.com insisted on having the opportunity to sell the competitor's products, the post office said it would kill the deal.
"There is a problem made for us unless exclusivity is taken off the table, because we have to embrace other carriers now, we cannot afford to continue to be exclusive to USPS," McBride says in the earnings call. In our customers' interests, and if our customers cannot get the best solution, do not get the best deal in the market, then they will leave us and eventually we will lose something. "
Read: Why was the US Postal Service at CES?
McBride said in the conference call that the company had not completely erased its relationship with USPS, and will still sell stamps along with other services. com planned to continue working with the post office "in the segments of the market where they offer a solution that is in the customer's best interest," he said. As part of the plan, the company wants to work with carriers such as Amazon and others to build a "portfolio "on 40 US carriers and 450 carriers around the world.
McBride said Stamps.com is correlated closely with e-commerce trends, and once it has set up multi-carrier deals, its growth and revenue will reflect the ecommerce sector as whole.
"So if you look in the longer term, when we have more revenue in place, no matter what the economy may be, finally, what that growth and revenue is going to be based on and related to, will be e-commerce trends, and they seem to be systematically quite strong, McBride said in the conference call.
Related: Stamps.com was one of the best small capital markets in 2019 among Wall Street analysts
The online mail provider said adjusted earnings for 2019 are expected to be $ 5.15 to $ 6, 15 a share of revenue of $ 540 million to $ 570 million, a large decline from adjusted earnings of $ 11.78 a share of revenue of $ 586.9 million in 2018. Analysts on average expected 2019 adjusted earnings of $ 10.79 a $ 689.1 million share of revenue before Thursday's report, according to FactSet.
Stamps.com reported fourth quarter $ 42.7 million, or $ 2.30 per share, on sales 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 per share, and lightly averaged analyst estimates, which required adjusted $ 2.90 per share on sales of $ 160 million, according to FactSet.
Forward of Thursday's retrospective release, the Stamps.com share had risen by 7.1% over the past year, as the S&P 500 index
SPX, [0.459006] -0.35%
increased 2.7%. Its shares have never fallen more than 25.4% in a single session.