The market started the year with a jump, then remembered the world doesn’t run on optimism. The S&P 500 dipped a percent by mid-March. A paper cut, maybe, but enough to make a few traders twitch.
Chewy (CHWY +3.37%) took a bigger hit. Down twenty-three percent this year. A solid drop. Doesn’t mean it’s a steal. Just means it’s cheaper. Like a rainy day special on a broken umbrella.
A falling price gets the vultures circling. But before you dive in, you need to look under the hood. See if the engine’s still got some life in it.
The Business, Briefly
Chewy’s a young outfit. Started in 2011. Doesn’t have the history of a blue chip, which, frankly, is often a good thing. Less baggage.
They sell pet supplies. Online only. Simple enough. They caught a wave with the pandemic, people stuck at home, spoiling their furry companions. Sales went from $4.8 billion in 2019 to $10.1 billion by 2022. A nice run. But those days are over. The pet pampering boom had to end sometime.
Now they’re focused on keeping the customers they have. And adding a few more. Active customers grew almost five percent to 21.2 million. Sales per customer also up five percent, to $595. Not spectacular, but steady. Like a slow leak in a tire. Annoying, but manageable.
Their subscription service is doing okay. Up thirteen percent to $2.6 billion. That’s the good stuff. Recurring revenue. Keeps the lights on. Overall revenue growth came in at eight percent. Not bad, but not enough to make anyone write home about.
The Price of Dreams
Chewy’s moving in the right direction. But the stock is still pricey. Down this year, sure, but still trading at a high multiple.
The price-to-earnings ratio is 52. That’s rich. Compared to the S&P 500, which is at 29. A significant difference. It means the market expects a lot from this company.
Can Chewy deliver? That’s the question. And a loaded one, at that.
A Once-in-a-Lifetime Opportunity?
Maybe they’ll pick up steam with those vet clinics. Management seems optimistic. But optimism doesn’t pay the bills.
The market’s already priced in a lot of growth. Things have to go just right. A smooth ride. Any bumps in the road, and the stock could fall. Fast.
So, is this a rare opportunity? I wouldn’t bet on it. The valuation is too high. Too much hope built in. There are easier scores to be had. Other companies that don’t require a leap of faith. I’d suggest looking elsewhere. There are plenty of stray dogs in the market, but this one looks a little too well-groomed.
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2026-03-16 13:22