Reasons Behind Chewy's Stock Decline Today
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 10 2025
0mins
Should l Buy CHWY?
Source: Fool
Earnings Report Overview: Chewy reported adjusted earnings of $0.33 per share and sales of $3.1 billion for Q2, but the stock fell 12.6% due to a significant decline in GAAP earnings, which were only $0.14 per share, reflecting an 80% year-over-year drop.
Customer Base and Future Outlook: Despite the earnings decline, Chewy's business remains stable with 83% of net sales coming from repeat customers using Autoship, and the recent profit drop is attributed to the absence of a prior year's tax credit, suggesting potential for future profit growth.
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Analyst Views on CHWY
Wall Street analysts forecast CHWY stock price to rise
20 Analyst Rating
17 Buy
3 Hold
0 Sell
Strong Buy
Current: 24.600
Low
42.00
Averages
47.06
High
52.00
Current: 24.600
Low
42.00
Averages
47.06
High
52.00
About CHWY
Chewy, Inc. is an e-commerce business geared toward pet products and services. The Company’s products consist of pet food and treats, pet supplies and pet medications, other pet-health products, and pet services. It serves its customers through its retail websites, and its mobile applications and focuses on delivering customer service, competitive prices, convenience, including Chewy’s Autoship subscription program, and a range of pet food, treats and supplies, and pet healthcare products and services. It partners with approximately 3,200 of the brands in the pet industry, and it creates and offers its own private brands. It owns a number of trademark registrations and applications in the United States and in foreign jurisdictions. These trademarks include American Journey, Blue Box Event, Careplus, Chewy, Chewy.com, Chewy Vet Care, Dr. Lyon’s, Frisco, Goody Box, Onguard, PetMD, PracticeHub, Tiny Tiger, True Acre Farms, Tylee’s, Vibeful, and The Zoo.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Misunderstanding: Many investors perceive Chewy as a low-margin, highly competitive online pet retailer, overlooking its established habit-based consumer platform, which demonstrates greater resilience amid economic uncertainty.
- Stability of Consumer Spending: Despite rising fuel costs and economic pressures, Chewy's products, such as dog food and cat litter, remain stable necessities, highlighting the difference between pet care and other discretionary consumer goods.
- Financial Performance: Chewy is expected to grow revenues by over 8%, significantly higher than the S&P 500's average growth rate, yet it trades at a forward P/E of 16.5x, indicating a roughly 25% market discount, suggesting its stock is undervalued.
- Technical Challenges: Despite strong fundamentals, Chewy's stock has fallen 23% year-to-date and is down over 78.5% from its all-time high, leading investors to adopt a wait-and-see approach ahead of its upcoming earnings report, contributing to a bearish market sentiment.
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- Petco's Positive Outlook: Petco's guidance for Q1 adjusted EBITDA between $92 million and $94 million exceeded analyst expectations, causing shares to rise 12%, highlighting strong demand and growth potential in the pet products and services market.
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- Chewy Steady Growth: Chewy reported third-quarter sales of $9.3 billion, an 8% year-over-year increase, and despite its stock price nearly halving since last year's peak, the company has achieved profitability, with projected net income reaching $225 million by 2028, indicating strong growth potential.
- Analyst Support: Despite bearish market sentiment, the majority of analysts still rate Chewy as a strong buy, with a consensus price target of $44.82, over 70% higher than its current price, reflecting confidence in its future growth trajectory.
See More
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Market Recovery Potential: Internet stocks have significant potential for recovery following declines attributed to two major concerns.
Analyst Insights: Evercore analysts have identified several internet stock names that may benefit from this recovery.
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Investment Opportunities Amid Market Turbulence
- Carnival's Recovery: Carnival (CCL) has successfully managed its debt and returned to an investment-grade credit rating, with record revenues in recent quarters indicating strong market demand for cruises, showcasing its resilience post-pandemic.
- Chewy's Customer Loyalty: Chewy (CHWY) benefits from over 80% of its sales coming from its Autoship service, reflecting strong customer loyalty; while its stock hasn't soared yet, its steady growth and solid customer base make it a compelling buy during downturns.
- Amazon's Steady Growth: Amazon (AMZN) remains a leader in e-commerce, ensuring consistent growth even in tough markets, with AWS driving significant revenue growth, and its cost structure revamp is expected to enhance profitability moving forward.
- Attractive Market Valuations: Carnival's stock trades at just 10x forward earnings estimates, while Amazon's is at 27x, both indicating strong investment potential in the current market environment, making them suitable for long-term holding.
See More
Investment Opportunities Amid Market Turbulence
- Carnival's Recovery: As the world's largest cruise operator, Carnival has been steadily reducing the debt accumulated during the pandemic, recently achieving an investment-grade credit rating, while reporting record revenues and increasing future cruise bookings, indicating strong market demand.
- Chewy's Growth Potential: Chewy's Autoship service accounts for over 80% of its sales, showcasing customer loyalty; despite its stock not performing well yet, its stable customer base and growth potential make it a worthwhile investment during market turbulence.
- Amazon's Market Leadership: Amazon's dominance in e-commerce and AWS's leadership in cloud services ensure steady growth even in tough economic times, with a current forward P/E ratio of 27, presenting a solid buying opportunity for investors.
- Value of Long-Term Investment: Despite the challenging market environment, investing in companies with long-term growth potential like Carnival, Chewy, and Amazon can yield substantial returns in the future, especially as finding these 'bargains' becomes crucial during potential market crashes.
See More
Analysis of Chewy's Undervalued Stock Reasons
- Market Misunderstanding: Many investors perceive Chewy as a low-margin, highly competitive online pet retailer, overlooking its established habit-based consumer platform, which demonstrates greater resilience amid economic uncertainty.
- Stability of Consumer Spending: Despite rising fuel costs and economic pressures, Chewy's products, such as dog food and cat litter, remain stable necessities, highlighting the difference between pet care and other discretionary consumer goods.
- Financial Performance: Chewy is expected to grow revenues by over 8%, significantly higher than the S&P 500's average growth rate, yet it trades at a forward P/E of 16.5x, indicating a roughly 25% market discount, suggesting its stock is undervalued.
- Technical Challenges: Despite strong fundamentals, Chewy's stock has fallen 23% year-to-date and is down over 78.5% from its all-time high, leading investors to adopt a wait-and-see approach ahead of its upcoming earnings report, contributing to a bearish market sentiment.
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