Chewy stock reaction and recent performance

Chewy (CHWY) has been in focus after recent trading, with the stock closing at US$21.65. Investors are weighing this move against a share price that is down over the past month.

The recent 1 day share price decline of 5.46% extends a weak run, with the 30 day share price return down 14.63% and the 1 year total shareholder return down 47.18%. This suggests momentum has been fading as investors reassess Chewy's risk and growth profile.

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With Chewy stock down sharply over the past year but the business still generating US$12.60b in revenue and US$222.8m in net income, is the current price a reset that reveals value, or is the market already discounting future growth?

Most Popular Narrative: 46.9% Undervalued

Chewy's most followed narrative sets a fair value of $40.77 per share, well above the last close at $21.65, framing the stock as heavily discounted in that work.

Chewy's strategic expansions, such as opening new Chewy Vet Care Clinics, are expected to further penetrate the $25 billion vet services market, likely increasing revenue and active customer engagement in 2025 and beyond.

Curious what justifies almost double the current share price in that narrative? Growth targets, margin aims and a punchy earnings multiple all sit under the hood.

Result: Fair Value of $40.77 (UNDERVALUED)

However, the heavy reliance on Autoship for over 80% of sales, combined with uncertainty around Vet Care Clinics and sponsored ads, means execution missteps could quickly challenge that undervalued thesis.

Another View: Earnings Multiple Sends A Different Signal

While the popular narrative sees Chewy as undervalued with a fair value of $40.77 per share, the current P/E of 40.5x tells a different story. It is higher than the estimated fair ratio of 25.4x, the US Specialty Retail industry at 19.5x, and peers at 22x, which points to valuation risk if growth or margins fall short. So is this a genuine discount to fair value or a rich price for an execution story?

Next Steps

With sentiment on Chewy feeling mixed, this is a moment to move quickly, review the full picture, and decide where you stand using 2 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.