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Amazon May See Over $1 Billion in Higher Postage Fees Says Credit Suisse

The United States Postal Service has recently filed notice with the Postal Regulatory Commission (PRC) of price changes to take effect on January 27th of next year.

The Governors of the Postal Service have already approved the proposed fees, which would raise Mailing Services product prices approximately 2.5 percent. Shipping Services price will increase by the certain product.

If the PRC approves, the new prices would include the First-Class Mail Forever stamp reaching 55 cents from 50 cents.

Credit Suisse has chimed in on how much they believe these higher fees would cost Amazon and the number is over $1 billion in 2019.

According to Credit Suisse, the proposed higher prices could cost the e-commerce giant over $1 billion. Analyst Stephen Ju cut his 2019 pro forma earnings per share estimate by nearly 19 percent to $34.99. Credit Suisse still remains positive on the stock with an “outperform” rating and a price target increase from Ju to $2,400 from $2,100.

“As we roll forward the sensitivity analysis to 2019, we arrive at a potential incremental Shipping Expense range of $400 million to $1.1 billion range with the assumption that 40 percent to 50 percent of U.S. packages are shipped via the Postal Service,” wrote Ju.

President Donald Trump has criticized in that past that Amazon has taken advantage of the United States Postal Service. Trump tweeted this past July, “The Amazon Washington Post has gone crazy against me ever since they lost the Internet Tax Case in the U.S. Supreme Court two months ago. Next up is the U.S. Post Office which they use, at a fraction of real cost, as their ‘delivery boy’ for a BIG percentage of their packages.”

A USPS spokesperson however has said to Business Insider that the proposed price increase was not in response to Trump’s criticism.

In an email to Business Insider, the spokesperson said, “The price increases reflect the best judgment of the Postal Service Governors, who are seeking to establish new rates that will keep the Postal Service competitive, while also providing the Postal Service with much needed revenue.”

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