Barking Up the Right Tree? Wag!’s EPS Struggles vs. Revenue Growth—Invest Now or Walk Away?

The pet care market is booming, but can Wag! Group (NASDAQ: PET) turn its high-revenue, high-loss trajectory into a sustainable win? Let’s dissect the numbers and decide if this stock is worth a bark—or a meow.

Revenue Rocket Fuel—or a Fizzling Firework?

Wag! has been a revenue machine, growing from $12 million in late 2020 to a peak of $87 million in Q1 2024—a blistering 33.3% annual growth rate that outpaces the 20.27% industry average. But here’s the catch: Q1 2025 revenue cratered to $15.2 million, a 34.5% plunge from last year’s $23.2 million. That’s not just a hiccup—it’s a red flag.

The company blames “strategic realignments” and “operational shifts” for the drop, but investors deserve clarity. While CEO Garrett Smallwood insists results were “slightly ahead of profitability expectations,” the $4.9 million net loss in Q1 2025 (up from $4.2 million in 2024) and negative Adjusted EBITDA ($1.2M) scream burn rate acceleration, not efficiency gains.

EPS: A Lost Pup or a Loyal Hound?

Wag!’s GAAP EPS has been in the red since 2020, but the May 2025 figure of -$0.10 (assuming this reflects Q1 2025 results) is a 31% wider loss than Q4 2024’s -$0.07. The EPS “improvement” from -$0.47 in Q3 2022 to -$0.10 today is a mere 78.7% reduction in losses—not exactly a victory lap.

The question is: Are these losses a necessary scaling cost or proof of structural flaws? Wag! has spent heavily on acquisitions (e.g., WoofWoofTV’s 18M followers) and new platforms like WeCompare.com and Furscription software, which could pay off long-term. But with $10 million raised in a July 2024 equity offering, shareholders are getting diluted—shares outstanding jumped 21% in 2024—to fund these bets.

The Burn Rate Beast: Is It Worth the Bait?

Wag!’s cash burn isn’t minor. Even with a $2 million–$4 million Adjusted EBITDA target for 2025, the company’s recent Q1 stumble and $4.9 million net loss suggest it’s still burning cash faster than it’s growing revenue. If revenue doesn’t rebound, the $84 million–$88 million 2025 revenue guidance could miss—especially after Q1’s $15.2M stumble.

Meanwhile, the stock trades at a $140 million market cap (as of May 2025), with analyst upside targets as high as $4.13 per share (a 2,636% upside). But here’s the rub: No profits yet, and the path to breakeven keeps slipping.

To Buy or Not to Buy—The Cramer Verdict

Why Invest?
- Market Dominance: The pet care sector is $100 billion+ and growing, and Wag! is a leader in digital services.
- Strategic Assets: Acquisitions like WoofWoofTV and Furscription could create sticky revenue streams.
- Growth Potential: If it reignites revenue growth (back to $20M+ quarters), the stock could soar.

Why Flee?
- Profitability Purgatory: Five years of losses with no clear path to EBITDA-positive.
- Dilution Disaster: Shares outstanding up 21% in 2024; further offerings could sink value.
- Competitive Risks: Rival platforms like Rover or Chewy could undercut pricing.

Final Howl: Proceed with Caution

Wag! isn’t a buy for income investors—it’s a high-risk, high-reward speculative play. If you’re all-in on the pet tech revolution, allocate a small portion of your portfolio and set strict stop-losses. But if you’re waiting for proof of profitability, wait until 2025’s breakeven target is met—or pass on this one.

Action Plan:
1. Watch for Q2 2025 results—revenue must rebound above $20 million.
2. Demand clarity on share count: If more dilution is coming, run.
3. Seek operational proof: Furscription adoption and WoofWoofTV monetization must materialize.

Bottom Line: Wag! is a gamble. If you bet on it, make sure it’s a small bet—because this puppy’s leash is still very, very long.

This analysis is for informational purposes only. Always consult a financial advisor before making investment decisions.