$CHWY - Earnings December 9th

Edit: also just want to clarify that this is work in progress. Based on the preliminary research, seems like this has a little bit more room to fall (from a fundamentals perspective). It does look like it hit some previous support though, so we might have to see how this plays out over the week. Please feel free to contribute any research or analysis you think would be helpful!

Chewy (CHWY) has earnings after market close on Thursday, December 9th. Some quick highlights:

  • CHWY was $20-30 just before the pandemic started
  • CHWY hit a high of $120 on February 16, 2021.
  • CHWY closed at 62.69 at market close today (12/3/2021)
  • CHWY it looks like CHWY only had positive net income Q1 and Q2 of 2021. Q3 of 2021 was negative net income again.
  • It looks like Q4 is also expected to be negative net income.
  • CHWY market cap is $26.19B and it looks like they are on track for maybe $8B revenue on an annual basis.
  • For comparison, Petco (WOOF) has a market cap of $5.81B, and has about $5.5B in annual revenue. WOOF has had positive net income on a quarterly basis (looking through October 2020 to October 2021) except for quarter ending in January 2021.

Is this another overpriced pandemic stock? I think signs point to yes.


Good potential, going to do some research. As a pet owner it is easier to just go to Petco or whatever now since I can get items instantly.


I completely agree with the overpriced Covid play. I was looking at site traffic and it’s significantly down as well. I’ll be watching a put play here. But…it has been getting beat up

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Heya, I’m just offering a possible counterpoint to consider, if things do get worse with a surge/omicron variant, there could be another boom in pet adoptions, and thus could cause a large amount of traffic to come in again to the site.

I mostly was driven to bring this up because my fiancé worked for Fed-Ex until about 1 month ago because I’m now trading full time and the deliveries work was becoming overwhelmingly short staffed and rough on the drivers - that said, she said she was constantly delivering chewy boxes (sometimes up to 10% of her deliveries on a given day - this is in a Bay Area, CA county) and that since they are often in subscription options she ended up delivering monthly to the same houses so it’s kind of sticky regarding customers and continued purchasing sometimes. I use chewy personally just for dog treats that get delivered on a monthly basis for my shib/husky mix.

From a technicals standpoint they have been getting pretty beat down lately, and when indexes do stabilize I think there is possible
Gap fill potential to the upside, but in the short term puts may be an interesting play, especially if SPY dumps below $450 next week.

I think this stock presents some big possible gains in both directions and presents opportunity :+1:t3:

I do not have an active position in chewy.


I work for UPS, I work on the preload and I can say I see a lot less Chewy boxes on our belt the past few months.


counter counter point: bay area californians are not a good representation of the general populace (they’re rich as fuck) and with inflation being on people’s minds its unlikely they are going to splurge on pet stuff.


I am bearish with CHWY. Reasoning is mainly due to financials, which in my opinion do not look good. I may be wrong so take all of this with a pinch of salt. However, technicals also say a bearish story.

As it was mentioned before, it may be that CHWY was a heavily inflated COVID stock, which has been, and I think will continue to for a while, dropping. It has been steadily dropping since mid August.

I feel the drop will be further, but I do not think it will be as substantial as was extreme case of DOCU. I reiterate, I may be completely wrong, this is just my add on to this DD, and is not financial advice.

I think people probably continue to use Chewy for the regular shipments of dog food considering their price is basically the same as buying in-store, and you get free shipping. However, these type of shipments likely are not that profitable for Chewy due to weight / size.

However, the extra “splurge” stuff (like Holi mentioned) that might have gone on while people were locked down at home during COVID bored and giving their pets extra attention, or just because they recently adopted the pet, has probably dropped off considerably.

With rising costs of everything this winter, people tighten their belts and reduce unnecessary spending. Pet adoptions also seem to be down from bits of news I’ve come across, and with Christmas time looking bleak the last thing parents want to do is get a pet and have more unnecessary expenses.

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Pharmacist here - real moneymaker for them would be pet meds. This space has been unlocking in the past and with increased pet adoptions + stickiness of meds (heart worm/ flea and tick) they could have life time value.

Definitely losing money with things like food and giving free shipping on a 40 lb package, but they have high margin plays as well.

The pet Med industry was 10B last year and growing rapidly with more people leaving their vet due to the 300% mark ups. I’ve seen a lot more ads for their medicine lately so if anyone could look into that on their p&l I would recommend it.


I don’t think pet meds would be enough to counter the shipping price. It would be safe to assume that an overwhelming majority of their business is pet food. How much of a mark up would they need to sell pet meds for if, just for guesstimate sake, 70% of all orders were pet food with free shipping? I don’t think the mark up would be enough to cover the loss in shipping nor could compete enough in terms of volume. I’m gonna buy food more often than meds, unless the animal requires a lot of meds, but in that case I’m shopping for the best deal on meds at that point.


I get flee/tick/heart worm pills from them, and its close to the same price as the dog food. As well as Insulin for our cat which is crazy expensive. My vet even recommended them vs getting from vet, only a couple $ cheaper but subscription is nice so you dont run out.

we get food too. Medicated (prescription) food for cat (seriously the most expensive animal we have lol) and dog food since the brand we like is harder to find locally.

I’ve got a friend who loads for UPS at a larger hub here in NJ. I can ask if he’s noticed anything.
EDIT: They ship mostly fedex here so thats no help lol

they primarily use Fedex I think (at least out here)

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I meant to add that too they could have easily switched Carriers due to a better offer or something.

So don’t take my observations to heart. I’ll see if I can get any numbers on their account though.

Website traffic appears to be down.

Looking at the chart in detail…

This to me looks bullish in the long run, but specifically for this ER, I won’t be fighting the downtrend.
What I will be looking at in the next few days are the Pivotal Support Lines.
It will probably break down 59.83 and further to 56.96, but 53.68 will be the key.
I’d be cautious for a hard bounce on that last one.

Barchart Opinion Ai…

Support and Resistance detail…


Motley Fool seems to be Bullish on earnings, due to the fact that CHWY’s valuation seems “attractive” going into earnings and its customer growth outpacing expectations. However, I still do believe CHWY could be one of those COVID inflated stocks, so the downtrend into earnings may still continue, but may witness of pop-up after earnings. May just play the IV going into earnings.

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I lean bear on CHWY, as it is a covid-19 inflated stock. Here’s some important things to consider before taking on this play:

  1. CHWY’s last ER was the initial exposure of how the company benefited from the covid-19 pandemic. This is likely already known and ‘priced-in’. That being said, it still is trading above it’s pre-pandemic levels.
  2. Their differentiator right now is expanding into pharmacy for animals. This not only adds a revenue stream, but also increases the stickiness of their users.
  3. For point 2, Amazon and Walmart are the two biggest competitors when it comes to purchasing online pet products:

Amazon and Walmart are also expanding their online pharmacy push for humans, and you can bet your bottom dollar they’ll look to expand that into the pet space as well. I do not expect Chewy to hold onto this advantage for long. I also don’t think the revenue driven from their pharmacy sector in their business will be significant to make up for their main money makers (food).

  1. During their last ER, it was reported their user base continues to grow and more importantly, $ per user was also increasing.

“Customer spending on our platform is at an all-time high,” Singh said. In the second quarter, Chewy’s net sales per active customer was $404, up 13.5% compared with the same period last year. Active customers of 20.1 million in the second quarter was 21.1% higher than in the second quarter in 2020.

“So what does that tell you? More customers. They’re spending more. They’re staying with us longer, and we continue to deliver very strong comps,” Singh said.

  1. They mentioned supply chain headwinds as a reason for their rising out-of-stock levels,

Out-of-stock levels remained elevated in the second quarter, but they improved modestly versus the first
quarter, resulting in a smaller drag on net sales in the second quarter. This is the result of supply chain
conditions improving in some areas as certain vendors reduce backlogs. However, other areas like wet
dog food are still being affected by industry-wide production capacity limitations.

A big reason on their revenue miss was on supply chain, which they noted as “moderately improved”. There aren’t many companies that are handling supply chain well. It is unlikely CHWY is too.

  1. Petco reported last quarter their online revenue is booming.

Digital revenue grew 32% YoY and 159% on a two-year basis2
; driven by repeat delivery, BOPUS and Same Day Delivery differentiation

The difference between CHWY and WOOF (Petco) is Petco also has the benefit of foot traffic. When you make a delivery purchase from CHWY, you receive your product and that’s the end of that transaction. While Petco also offers delivery, you can also opt to go pick up your product at Petco. The foot traffic advantage of going into Petco works in their favor as customers are more likely to purchase additional products to the ones they purchased online to pick up.

In general my thesis is CHWY had first mover advantage but their lunch is getting eaten by traditional retailers expanding into the pet ecommerce space. What made CHWY great in the first place (online ordering and convenience) is also what’s stopping them from expanding as much as they could. This ER play should be interesting to see how they plan on growing their # of customers. In a year or so, I wouldn’t be surprised to see them get acquired by a major retailer.


Wmt already has per rx through white label


Amazons further out.

This is all the info I could find on Chwy. Not all of it is relevant but always good to have more info than less info.

Imo, the most important data is job openings, website traffic, and google trends which are all showing semi-bearish data. I confirmed on similarweb.com that website traffic does seem to be declining, but they still have more traffic than most of its competitors (data isn’t the most up-to-date btw) except for maybe Amazon and Walmart, per Swole’s comment.


Twitter shows bullish here. Basically purchase intent twitter mentions has stayed steady over the last year. Has the stock dropped enough from $120 high? That’s my concern.

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