It's a Dog's Life for Chewy Short Sellers
By Jim Pearce
Two years ago, my daughter surprised my wife and I by walking through our door with a puppy. She had been wanting a dog of her own for a long time and finally decided the time was right.
When it comes to raising dogs, some things never change. As puppies, they require constant attention. Having raised several dogs over the course of my life, I had a good idea of what she was in for.
However, some things have changed. Instead of driving to a store like I did to get the food, medications, toys, and all the other things a dog needs, she can have it all delivered to her home.
She also had some of it delivered to my home for when I watch Fiona. That is how I became acquainted with Chewy (NYSE: CHWY).
The company was founded in 2010 just as ecommerce was taking off. In June 2019, Chewy went public. That day, its share price soared more than 60% above its IPO price of $22.
Turns out, that was as high as it would get for the rest of the year. By the last week of December, it was below $30.
However, Chewy's fortunes changed for the better with the arrival of COVID-19 a few months later. Pet adoptions spiked at the same time social distancing restrictions temporarily closed stores during the height of the pandemic.
The result was a huge increase in online shopping for pet supplies. By the end of 2020, CHWY was trading above $100.
Going to the Dogs
At that time, Chewy was regarded as one of the "must own" retail stocks during the pandemic. Even though the company was unprofitable, Wall Street was looking to the future and liked what it saw.
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