Stamps.com Lawsuit Results in Settlement of $100 Million to Investors

Almost two years have passed since investors filed a class action lawsuit against the shipping software giant Stamps.com. This week, a federal judge in California declared that Stamps.com will pay a settlement total of $100 million to investors involved in the lawsuit. This award stands as confirmation of those investors’ allegations that the company defrauded them by concealing a souring relationship with USPS, which ultimately led to a decline of more than 50% of the company’s stock price…in one day.

Background on the Stamps.com Class Action Lawsuit

In the years leading up to 2019, Stamps.com was thriving. It had recently acquired other shipping software solutions ShipStation, ShippingEasy, and Endicia, and its well-performing stock price (back then) reflected investors’ bullish stance on the company’s future. On quarterly earnings calls, Stamps.com executives continuously assured investors of its relationship with USPS; the US Postal Service was, after all, the company’s largest partner. However, in May of 2019, things began to change.

That month, the company ended its longstanding partnership with USPS…and the markets did not react well. In fact, in the trading day after the announcement, Stamps.com stock prices plummeted more than 50%. This effectively erased half the company’s market share, which translated to billions of dollars in losses overnight.

Due to the unprecedented drop in the company’s stock price, Matt Karinski filed the lawsuit on behalf of himself and all other investors who purchased Stamps.com stock between May 3, 2017 and May 8, 2019.

After Investors Took Legal Action, Stamps.com Went Private and Rebranded to Auctane

On the heels of this class action lawsuit, Stamps.com’s days as a public company under scrutiny began dwindling. Private equity firm Thoma Bravo announced it would acquire the company in July 2021, and a few months later after Stamps.com was taken private, it underwent a name change (likely in hopes of shedding some of the negative press). The company’s new name became Auctane, and other than the rebrand, nothing significant about operations changed.

Auctane still provides discounted USPS and UPS postage to its users, and still owns Shipstation, ShippingEasy, and Endicia, among others. All of these shipping software providers continue to operate independently under the Auctane corporate umbrella.

In December of 2021, Auctane acquired Packlink, which is Europe’s leading discounted postage provider for eCommerce businesses and individuals. This acquisition may enable Auctane to capture greater share of Europe’s fast-growing consumer shipping market.