The team over at Shutterfly learned yesterday (Sept. 21) that, when Amazon announces it is getting into your line of work, investors notice and worry.
Shutterfly experienced its worst single-day decline in more than eight years on the announcement of Amazon Prints — a service that will offer customers printed photographs for $0.09 and photo books starting at $20. Calendars and cards are reportedly coming soon. The time of the announcement is also particularly tough for Shutterfly since the firm makes about half its annual revenue during the holiday season when customers are particularly excited about making cards and calendars with the service.
Victor Anthony, an analyst at Axiom Capital Management, who follows both companies, noted that this particular bit of news could not come at a worse time for Shutterfly.
Prime has long offered members free photo storage with an annual membership, but printing is a new feature and method by which they can monetize that free storage service. And possibly by quite a lot. By some estimates, U.S. consumers will spend upwards of $2 billion on online photo printing services. In 2016, Shutterfly is on track to rack up revenue of $1.15 billion providing photo printing and related services, according to analyst estimates compiled by Bloomberg.
But yesterday saw Shutterfly’s stock drop 12 percent — its single biggest one-day drop since 2008.
Shutterfly in March hired Chief Executive Officer Christopher North from Amazon, where he spent a decade expanding the company’s business in the U.K.
Well, you know what they say about payback.
Still, some think the selloff was a bit of panic from investors, rather than rational forethought of risk.
“Most Prime customers go to Amazon for the convenient and expedient shopping experience, whereas photobook curation tends to be a more time-consuming, customized transaction,” noted Colin Sebastian and Ben Gaither, analysts at Robert W. Baird & Co.