Chewy Stock Volatility: A Financial Analysis

Chewy, a pet e-commerce company, has been a volatile stock since its IPO over 5 years ago, with a beta of 1.7x, implying double the volatility of the market. Despite its popularity, the company's stock has not performed as expected, and some investors are questioning its value. As a finance expert, I would advise caution when investing in Chewy stock due to its high volatility and unpredictable performance.

Chewy, Inc. (CHWY), a leading pet e-commerce company, has experienced significant volatility since its initial public offering (IPO) five years ago. The stock's beta of 1.7x indicates double the market volatility, making it a high-risk investment. Despite its popularity and strong market position, Chewy's stock has not performed as expected, raising concerns among investors.

According to Zacks Investment Research, Chewy is expected to report top and bottom-line growth for the second quarter of fiscal 2025. The Zacks Consensus Estimate for quarterly sales is pegged at $3.1 billion, representing a 7.8% increase from the year-ago quarter [1]. The consensus mark for earnings per share has been stable at 33 cents, showing a 37.5% year-over-year growth [1]. However, the company's earnings surprise has been mixed, with an average of 8.1% over the trailing four quarters, but a lower 2.9% in the last reported fiscal quarter [1].

Several factors are likely to impact Chewy's Q2 results. The company's digital capabilities, product assortments, and expansion efforts have driven sales growth. Additionally, the resiliency of the pet category and strength in the value proposition have been positive contributors [1]. However, macroeconomic factors such as inflationary pressures and tariffs could pose challenges [1].

Citigroup Inc. recently reduced its holdings in Chewy by 23.1%, owning 199,459 shares worth approximately $6.48 million after selling 60,080 shares in the first quarter [2]. Despite this reduction, several institutional investors have increased their stakes in Chewy, with Alyeska Investment Group raising its holdings by 6,336.6% to 1,609,149 shares valued at about $53.89 million [2]. The company's stock currently has a market cap of $16.81 billion, a P/E ratio of 45.49, and an average price target of $43.78 from analysts, indicating a "Moderate Buy" rating [2].

Chewy's recent analyst upgrades and downgrades reflect the mixed sentiment surrounding the stock. UBS Group, Royal Bank of Canada, Guggenheim, and Morgan Stanley have issued positive ratings and price targets, while Citigroup restated an "outperform" rating [2]. However, the stock's high volatility and unpredictable performance make it a risky investment for cautious investors.

In conclusion, while Chewy, Inc. is expected to report strong Q2 results, its high volatility and mixed performance raise concerns for investors. As a finance expert, I would advise caution when investing in Chewy stock due to its high volatility and unpredictable performance.

References:
[1] https://www.nasdaq.com/articles/chewy-report-q2-earnings-essential-insights-ahead-report
[2] https://www.marketbeat.com/instant-alerts/filing-citigroup-inc-has-648-million-stock-holdings-in-chewy-chwy-2025-08-18/