Chewy Stock Eyes Worst Day Since 2023 After Profit Miss

Chewy Inc. (CHWY) shares are down 11.3% to $40.63 after a first-quarter earnings miss and a disappointing full-year outlook, despite recent customer growth. The decline puts the stock on track for its worst day since August 2023, pulling back from a two-year high, while short interest remains elevated at 7.8% of the float. Options activity is heavily skewed towards puts, indicating a bearish sentiment among traders.

Analysis

Chewy Inc. (CHWY) experienced a significant stock decline, falling 11.3% to $40.63, following its first-quarter earnings miss and a lackluster full-year outlook, which overshadowed a reported revenue beat and recent customer growth. This marks the stock's worst daily performance since August 2023 and a retreat from its June 6 two-year high of $48.62, though it still maintains a 21% year-to-date gain. Potential technical support is noted at the 40-day moving average. Investor sentiment appears decidedly bearish, underscored by short interest increasing 17.7% over the last two reporting periods; the 14.80 million shares sold short represent 7.8% of CHWY's available float, equivalent to approximately three days of average trading volume to cover. This bearish stance is mirrored in the options market, with a 10-day put/call volume ratio of 1.50—ranking in the 98th percentile of its annual readings—and current options volume running at seven times the intraday average, heavily skewed towards puts (19,000 puts versus 13,000 calls traded), with active opening of new bearish positions such as the weekly 6/13 47-strike put.

Key Decisions for Investors

• Adopt a cautious stance on Chewy Inc. following the Q1 earnings miss, disappointing full-year outlook, and significant stock price decline.
• Monitor the 40-day moving average as a critical near-term support level; a sustained break below could signal further weakness.
• Factor in the notable increase in short interest (7.8% of float) and pronounced bearish sentiment in the options market, which suggest continued pressure and potential volatility, possibly warranting a review of exposure or consideration of hedging strategies.
• Re-assess the long-term investment thesis by carefully weighing the positive aspects of reported customer growth and revenue beat against the current challenges in profitability and the subdued corporate guidance.