Stock for good boys (and girls): Chewy shares

Love for stocks is temporary and connected with trends. Love for cute dogs, graceful cats, talkative parrots, fluffy hamsters, and other little friends is endless. While some controversial statements may not be suitable in this context, it is widely acknowledged that most pet owners deeply cherish their animal companions. These furry friends hold a special place in our hearts (and wallets). Curious to know how?

Chewy is a US online retailer specializing in supplying a wide range of pet products, including medications, food, treats, and various other pet essentials. The company holds a large share of the American market. And also Chewy was one of the gainers who got an enormous boost during the pandemic. The chart below demonstrates a remarkable surge in their performance, followed by a drastic decline. 

Of course, connecting all the movements in the chart with the pandemic only seems an oversimplification. Various events can exert influence. And many of them are scheduled. To stay informed about such economic events and their potential impact, you can use the economic calendar that provides insights into the significant events that help to forecast future market trends. 

Regarding Chewy, the pandemic effect is obvious – people spent most of their time at home and increased their online purchases of pet products. When the Covid restrictions were lifted, some customers chose to favor brick-and-mortar stores, leading to a decrease in online orders.

At the same time, Chewy still has strong positions according to numerous analysts. One key advantage of the business is crisis resilience. People may forgo purchasing new sneakers, shirts or even steaks but it’s hard to imagine somebody to stop buying food for their pets. Meaning Chewy enjoys a big and loyal audience in the segment characterized by regular demand. 

Moreover, the number of people who prefer online shopping is increasing. While it may be commonplace for you to make purchases on the internet, there are still many individuals in your country as well as your region and all over the world who prefer cash and shopping in an old-fashioned way. This observation is the synonym for Chewy’s potential for further expansion.

Chewy has also increased prices for the most goods recently, resulting in higher average order amount and positively influencing the company’s profit. Among other significant moments, we cannot fail to mention the introduction of proprietary brands and engagement in telemedicine and pet insurance. Plus, Chewy, currently operating only in the US, plans to broaden out internationally by the end of 2023.

If everything seems favorable, then why does the Chewy stock chart appear gloomy? Probably we’ve found a simple answer – one of the company’s trump cards was a rapid growth of the customer base, which is currently stagnated.

Many analysts still consider Chewy a promising long-term investment. The consensus forecast for the company's shares predicts a 30% increase over the next 12 months. Three dozen percent on stock of the company that make dogs and cats happy sounds like the best investment ever. However, conducting a thorough analysis remains crucial for executing a truly successful trade. This is rule #1 that every investor should stick to.

This article was written in cooperation with TradingView.