What is Chewy, the pet products website 'Roaring Kitty' is championing?
By Granth Vanaik and Siddharth Cavale
July 1 (Reuters) - Keith Gill, the meme stock trader "Roaring Kitty," thrust Chewy Inc CHWY.N into the spotlight when he made a $245 million bet on the online pet products retailer on Monday.
What is Chewy and why has it attracted Gill's interest?
WHAT'S THE BUSINESS?
Chewy is an $11 billion e-commerce retailer that offers about 115,000 pet products, including food, beds, litter and vitamins to U.S. customers through its websites and mobile app. Their $9.99-a-month subscription plan, which targets dog and cat owners, has been a key driver of their business.
It sells products under brands including A Pet Hub, Bark and Slumber, and Nutro, and its market capitalization stands at $11.87 billion, according to LSEG data.
By marketing its products to a narrow group of shoppers - pet owners - Chewy has been able to keep its marketing costs and inventory levels low, enabling it to grow its profit margins over the years.
The company reported net sales of $11.15 billion and merchandise margins of 28.4% for its fiscal year ended on Jan. 28, 2024.
Chewy competes with the likes of Amazon.com AMZN.O and Etsy ETSY.O, which also sell pet products online, in addition to Petco Health and Wellness WOOF.O, which operates over 1,500 stores in the United States.
WHAT'S CHEWY'S HISTORY?
GameStop GME.N CEO Ryan Cohen and Michael Day founded Chewy in 2011. They then sold the business to larger rival PetSmart for $3.35 billion in 2017, the largest acquisition of an e-commerce website at the time.
Two years later, PetSmart sold most of its Chewy shares in an IPO, in part to trim the debt it had amassed as part of its acquisition of the company. Chewy began trading on the New York Stock Exchange at a $36 share price on June 14, 2019.
Chewy's shares peaked at nearly $119 in early 2021, as Americans adopted pets during the pandemic and spent lavishly to care for them.
Chewy is chaired by BC Partners' Raymond Svider. The private equity firm continues to own around 68.6% of Chewy following its IPO, representing 95.6% of the voting power, it disclosed in a May 24 proxy statement.
BC Partners is also a majority shareholder of PetSmart.
WHY IS ROARING KITTY INTERESTED IN CHEWY?
Gill said on Monday that he had amassed a 6.6% stake in the company valued at $245 million, which analysts said was partly influenced by the fact that the retailer was founded by GameStop's Cohen.
Gill has called Cohen "the man" and brilliant in the past.
His stake makes him the third largest shareholder, based on the ownership disclosures in Chewy's proxy statement.
Gill's Reddit RDDT.N posts championing GameStop in 2021 fueled a nearly 700% rise in the video game retailer's shares in 2021.
HOW HAS CHEWY'S STOCK FARED?
Chewy's stock has been volatile since Gill posted an uncaptioned picture of a puppy on social media platform X that resembled Chewy's logo and sent its shares to a near one-year high on Thursday.
But including Monday's trading, Chewy's shares have lost 13% since Thursday's tweet.
The stock is also highly shorted, with 15.7% of its free-float shares in short position, as of June 27, according to Ortex Technologies, an analytics firm. By comparison, about 0.9% of Amazon's AMZN.O free float are shorted.
Reporting by Granth Vanaik in Bengaluru and Siddharth Cavale in New York; Editing by Trevor Hunnicutt
Asset collegati
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
