Key Stats for Chewy Stock
- Price Change for $CHWY stock: -17%
- Current Share Price: $35
- 52-Week High: $49
- $CHWY Stock Price Target: $46
What Happened?
Chewy (CHWY) stock tumbled almost 17% despite the online pet retailer meeting analyst expectations with adjusted earnings of $0.33 per share and slightly beating revenue forecasts with $3.1 billion in Q2 sales, representing 8.6% year-over-year growth.
The disconnect between meeting consensus and the stock’s decline highlights investor concerns about underlying profitability trends.
While Chewy reported strong operational metrics, including 83% of sales coming from its Autoship subscription program and a gross margin expansion of 90 basis points to 30.4%, the company’s GAAP earnings told a different story.
Actual earnings under generally accepted accounting principles were only $0.14 per share, an 80% decline from the prior year period.
The primary driver of the earnings decline was the absence of a $253 million income tax credit that benefited Q2 results last year.
This year, Chewy paid $12 million in taxes instead of receiving a credit, creating a year-over-year comparison headwind that weighed on bottom-line performance.
See analysts’ growth forecasts and price targets for Chewy stock (It’s free!) >>>
What the Market Is Telling Us About Chewy Stock
The adverse reaction to CHWY stock suggests investors are concerned about Chewy’s path to sustainable profitability despite strong top-line growth and improving gross margins.
While it continues to gain market share in a low-to-mid single-digit growth industry, questions remain about the company’s ability to generate consistent GAAP profits.
However, management painted an optimistic picture during the earnings call, highlighting several growth initiatives that could drive long-term value.
The Chewy+ membership program has rapidly scaled to represent 3% of monthly sales, with members exhibiting a higher frequency of purchases and larger basket sizes.
Additionally, the company’s new Get Real fresh dog food brand targets a fast-growing premium segment with significantly higher gross margins.
CEO Sumit Singh emphasized that Chewy is well-positioned to capitalize on potential tariff-related price increases in the back half of 2025, viewing this as an opportunity to gain market share while competitors raise prices.
A higher mix of consumables and health products, along with proactive inventory investments, should provide meaningful protection against cost pressures.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
