Wag! Group's Shares Plunge 26%—What's Driving the Freefall?

• Wag! Group (PET) plunged 26.2% to $0.121, hitting a 52-week low of $0.12
• Announced sale of Furscription to MWI amid financial restructuring
• Sector peers like Microsoft (MSFT) rose 0.99%, contrasting PET’s bearish trend

Today’s historic collapse of Wag! Group’s stock price marks its lowest valuation in over a year, with shares cratering from an open of $0.166. The sell-off follows multiple corporate restructurings and sector-wide volatility, with the stock now trading near its 2024 nadir. Investors are grappling with existential questions about the pet tech firm’s future amid strategic asset sales and deteriorating fundamentals.

Furscription Sale Sparks Profitability Concerns
The precipitous decline traces directly to Wag! Group’s announcement of selling Furscription software to MWI Veterinary Supply, coupled with ongoing negotiations with Retriever for potential partnerships. Investors interpreted these moves as desperate cost-cutting measures, fearing the company is divesting core assets to survive liquidity challenges. The absence of financial details in the press releases amplified uncertainty, with traders penalizing the stock for lack of clarity on post-restructuring profitability.

Bearish Technicals Point to Short-Term Weakness
• Bollinger Bands: Hugging the lower bound ($0.0585) suggests extreme undervaluation
• RSI: 56.47—neutral territory, no overbought/oversold extremes
• MACD: Histogram contraction signals weakening downside momentum
• 200-Day MA: $0.3086—162% above current price, indicating long-term bearish bias

Aggressive traders should focus on the $0.1385–$0.1417 support cluster formed over the past month. A break below $0.12 would target the 2023 lows near $0.075. Consider pairing short positions with the ProShares Pet Care ETF (PAWZ) (-0.56% today), which tracks industry sentiment. Despite its small dip, PAWZ’s 50-day MA at $58.30 offers resistance to monitor.

Options Note: No liquid contracts available in the provided chain. Technical traders should instead focus on selling rallies near the $0.15 resistance (50-day MA) or using inverse ETFs like CRAK (-0.96%) for leveraged exposure to energy-sector declines correlated with tech underperformance.

Backtest Wag! Group Stock Performance
The backtest of PET's performance after a -26% intraday plunge shows mixed results. While the 3-day win rate is 45.34%, the 10-day win rate is 49.12%, and the 30-day win rate is 45.09%, indicating a higher probability of positive returns in the short term, the actual returns over these periods are negative, with a -0.46% return over 3 days, a -0.85% return over 10 days, and a -0.37% return over 30 days. The maximum return during the backtest period was only 0.35%, which occurred on day 7, suggesting that while there is a chance of recovery, the overall performance after the plunge is lackluster.

Watch for Further Declines as Pet Care Sector Faces Headwinds
Wag! Group’s stock remains trapped in a downward spiral with no clear catalyst for reversal. The sector’s divergence—led by Microsoft’s modest gains—highlights PET’s unique challenges rather than industry-wide trends. Traders should monitor the $0.1385 support and the company’s ability to stabilize cash flows post-Furscription sale. A breach of $0.12 would validate the bearish outlook, while a rebound above $0.16 could signal temporary oversold buying. Action alert: Short PET at $0.125 with a stop above $0.14, targeting $0.10 if support fails.