Why Chewy Stock Fell 11.3% in the First Half of 2021

What happened 

Shares of online pet retailer Chewy (NYSE:CHWY) fell 11.3% in the first half of 2021, according to data from S&P Global Market Intelligence. Investors were concerned about how economic reopenings would affect sales and customer acquisition. 

However, the stock is rebounding of late and is up 12.7% in the last month. Still, the recent gains were not enough to put it in positive territory for the year.

Chewy’s stock was down 11.3% in the first half of 2021. Image source: Getty Images.

So What 

Chewy was one of the prime beneficiaries of the pandemic as folks avoided shopping at stores and instead shifted spending online. Sales, new customers, and stock prices all shot up in 2020. The trend is reversing in 2021 as multiple effective vaccines against the coronavirus are helping reduce the spread, and states are easing business restrictions. 

The speed of economic reopenings gave investors pause on this online pet retailer. The fear is that many folks will return to shopping in person, thus slowing the rapid expansion Chewy experienced during the pandemic. Still, in its fiscal first quarter of 2021, the company increased revenue by 31.7% from the same quarter last year.

This is slower than the pace it achieved in the most acute phase of the pandemic but represents solid expansion nonetheless. 

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Now What 

The coronavirus pandemic undoubtedly put a flame under Chewy’s growth. However, Chewy’s revenue was expanding robustly even before the onset. In fiscal 2018, 2019, and 2020, its revenue grew by 133.7%, 67.9%, and 37.25%, respectively.

Moreover, the company still has the long-run, secular tailwind of shopping moving from brick and mortar stores to online. And the pandemic allowed Chewy to add to its active customer totals, reaching 19.8 million as of May 2. Even if it loses some customers as the spread of COVID-19 eases, many of them are likely to stick around. Shopping online is simply more convenient, and there isn’t much brick-and-mortar stores can do about it. 

Overall, long-run investors can feel good about Chewy’s prospects. 


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/07/13/why-chewy-stock-fell-113-in-the-first-half-of-2021/

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