Chewy: A Dog’s Dinner of a Stock?

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Right. So, the pet industry. It’s…big. Obnoxiously so, if you ask me. People are spending fortunes on tiny sweaters and organic salmon for creatures who, let’s be honest, would happily eat something they found under the sofa. But hey, who am I to judge? It’s a solid market, apparently. Grew a respectable 8.2% annually from 2018 to 2025. And people feel things about their pets. Like, really feel things. It’s…intense. Which, naturally, makes a company like Chewy seem like a sure bet, doesn’t it?

Except, well, it hasn’t been. Has it? The stock’s taken a proper beating – down 80% from its 2021 high. Eighty percent. It’s the kind of drop that makes you question all your life choices, frankly. And yet, here we are, considering whether it’s worth a punt. Because, let’s be real, we all have that one stock that’s currently haunting our portfolio. Don’t pretend you don’t.

Plenty of growth stocks have gone to the great beyond, never to be seen again. So why am I even bothering with Chewy? Good question. I’ll tell you why. Because sometimes, just sometimes, a catastrophic tumble is exactly what you need to take a proper look at something. And what I’ve found isn’t entirely horrifying.

Blame the Bubble, Not the Business

Look, Chewy peaked during a time when everyone thought throwing money at anything with a pulse was a brilliant idea. It wasn’t just Chewy. It was…everything. The stock traded at 7 times sales. Seven! That’s…ambitious, even for a company selling gourmet dog biscuits. It’s the kind of valuation that makes you expect a unicorn to deliver your order. And when the bubble inevitably burst – as they always do – Chewy got caught in the crossfire.

Now, it’s trading at just 0.8 times sales. Which, honestly, feels…reasonable. The hot air’s definitely gone. But while the stock was busy plummeting, the actual business…kept going. Sales have more than doubled in five years, hitting $12.6 billion. And they’re actually generating free cash flow – $487 million, to be precise. It’s a little like finding a tenner in an old coat. Unexpectedly pleasant.

It’s hard to look past the wreckage, I admit. But there’s a functioning, growing business underneath all the red ink. And that, my friends, is a starting point.

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Strong Key Indicators Point to Better Days Ahead

Okay, let’s be realistic. Chewy is up against some serious competition. Walmart and Amazon aren’t exactly known for their gentle approach to business. And the sudden departure of the CFO in May…well, that didn’t exactly inspire confidence. But here’s the thing: dwelling on the past is a waste of perfectly good anxiety. We need to focus on what comes next. And there are a few signs that things might be turning around.

For starters, Chewy ended the third quarter of 2025 with over 21 million active customers. That’s a 4.9% increase year-over-year, and a net addition of 250,000 customers. People are still signing up. Still handing over their money for pet food and toys. It’s…reassuring, in a deeply cynical way.

But the real magic is in the autoship program. About 84% of net sales come from recurring orders. These people aren’t just buying a one-off bag of kibble. They’re signing up for a monthly delivery of everything their furry overlords require. It’s genius, really. It’s like a subscription to happiness…for your pet. And once you’ve got someone on auto-pilot, they’re less likely to wander off to a competitor.

The stock currently trades at just over 15 times full-2025 earnings estimates. And analysts are predicting average earnings growth of 18% over the next three to five years. It’s not a guaranteed win, obviously. Nothing ever is. But at this point, Chewy has fallen so far that even if they stumble a little, investors are likely to do well over the long term. And frankly, I could use a win. Don’t we all?

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2026-02-18 14:34