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Why is Chewy Inc (CHWY) Stock down?
Chewy Inc Stock (CHWY) fell by 10.26% due to a downbeat outlook issued by management for the coming fiscal year. Here are the key highlights:
- Earnings Report Impact: Chewy reported Q4 operating results, showing an increase in sales and improved profit margins, but both metrics were sluggish. Meanwhile, active shopper pool fell by 1.6% for the year, indicating a continued decline in customer base.
- Management Outlook: Management remains optimistic about long-term growth initiatives, including expansion into pet healthcare and the Canadian market. However, the next year is expected to be challenging, with a tougher selling environment, lower price increases due to cooling inflation, and pressure on volumes due to decreased pet adoption rates.
Chewy Inc (CHWY) stock dropped by 5.72% due to an analyst's downgrade after the announcemnet from American Kennel Cliub to launch pet pharmacy and a block trade by Morgan Stanley. Here are the key details:
- American Kennel Club Launches Pet Pharmacy: Chewy Inc (CHWY) witnessed a 5.72% drop in its stock price following the announcement of the American Kennel Club's (AKC) entry into the online pet pharmacy business with AKCRx, in partnership with Allivet. The American Kennel Club, known for being the world's largest purebred dog registry and a prominent advocate for dogs, is stepping into the pet pharmacy sector, which added downward pressure on Chewy's stock.
- Block Trade by Morgan Stanley Impacts CHWY Stock: In addition to the AKC's pharmacy launch, a block trade involving 12.3 million CHWY shares, facilitated by Morgan Stanley, contributed to the stock's decline. The block sale was priced at a range between $20.45 and $20.85 per share, notably lower than its previous closing price. Investors reacted to this discounted block sale negatively, causing a drop in CHWY stock's value.
- Mixed Analyst Views on CHWY Stock: Goldman Sachs, despite lowering its price target for Chewy (CHWY) to $46 from $50 as a new analyst assumed coverage, still maintains a Buy rating on the stock. However, Morgan Stanley's block sale has triggered heavy trading, with more than 8.4 million CHWY shares changing hands, inching closer to the company's daily average trading volume of approximately 9.2 million units.
Chewy Inc Stock (CHWY) dropped by 9.61% from $20.29 to $18.34 in the trading on Monday November 27, 2023. The reasons why CHWY stock down today include:
- Increased competition: Chewy is facing increased competition from Amazon, which is expanding its pet products offerings. Amazon has a significant advantage in terms of pricing and convenience, and this is putting pressure on Chewy's margins.
- High short interest: Chewy is a heavily shorted stock, with 24.34% of available shares being sold short. This means that there is a lot of pressure on the stock to go down, as short-sellers will profit if the stock price falls.
Chewy Inc Stock (CHWY) dropped by 5.58% from $21.13 to $19.95 in the trading on Thursday November 16, 2023. The reasons why CHWY stock down today include:
- Layoffs: Layoffs at pet supply company Chewy will affect more than 200 employees at its Plantation, Florida, headquarters, as well as other location across the U.S.
- Free cash flow: Out of the $339 million generated by Chewy in the past 12 months, $209 million came from stock-based compensation, which dilutes shareholder value. A substantial portion of Chewy's financial performance stems from working capital benefits, which cannot be directly distributed to shareholders. The company's heavy reliance on these non-operating metrics raises questions about its ability to generate sustainable value for investors.
Shares of Chewy Inc (CHWY) dropped by 7.61% from $18.79 to $17.30 in the trading on Thursday, October 12, 2023. The reason why CHWY stock down include:
- Analyst Price Target Cut: Analyst Eric Sheridan from Goldman Sachs reduced his price target for Chewy from $50 per share to $45 per share. While he maintained a "buy" recommendation on the stock, the price target reduction signaled a less optimistic outlook for Chewy's future stock price.
- *Multiple Price Target Reductions**: Sheridan's price target cut was not an isolated event. It followed a series of recent reductions by other analysts. For example, Barclays analyst Trevor Young had lowered his price target to $20 per share from $28 per share and changed his recommendation to "equal-weight" (hold) earlier in October. Another analyst, Rupesh Parikh at Oppenheimer, had downgraded his recommendation on the stock from Outperform to Perform at the end of September.
Chewy (CHWY) shares hit a new 52-week low, dropping 5.27% due to weaker consumer sentiment and negative comments from Jim Cramer. The company's reliance on pet-related spending, combined with a decline in active customers and economic caution, has raised doubts about its profit potential, despite optimistic analyst price targets averaging at $36.70.
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