Chewy Stock Is a Trending Meme Stock Now. Should You Buy It?

Meme stocks are back in fashion this 12 months, with GameStop (NYSE:GME) stock and AMC Entertainment (NYSE:AMC) stock catching bids in mid-May. Now Chewy (NYSE:CHWY) stock is on the move, and it looks like short-squeeze traders have a recent shiny object to concentrate on in July.

Thus, for higher or for worse, the meme-stock trend hasn’t fully run its course yet. Meanwhile, investors might want to contemplate whether Chewy stock is price buying by itself merits.

On top of all that, there’s the irony of a social-media denizen called “Roaring Kitty” taking a big position in a pet-supplies provider. These are strange times we live in, but perhaps the worth proposition of Chewy stock can provide enterprising investors something to chew on.

“Roaring Kitty’s” recent pet project

Simply to recap, “Roaring Kitty” is the X handle of retail trader and meme lord Keith Gill. He’s the unofficial leader of a small army of short-squeeze traders who spurred sharp but short-lived rallies in GameStop, AMC Entertainment and a handful of other stocks in 2021.

Gill resurfaced on social media in May after a protracted hiatus. GameStop and AMC Entertainment stocks got a fast bump in May before coughing up most of those gains and leaving ill-timed traders holding the proverbial bag.

Fast-forward to June 27, when Gill posted on X an image of a cartoon dog with no accompanying text:

Even an image with no context was evidently enough to prompt a fast rally in Chewy stock and Petco Health and Wellness (NASDAQ:WOOF) stock. Nevertheless, until recently, there was no strong evidence that Gill actually owned a big share position in either of those pet-supply corporations.

Then on Monday morning, Chewy stock zoomed 20% to $32.72 within the premarket-trading hours. In line with a regulatory filing (via The Wall Street Journal), Gill disclosed a 6.6% stake in Chewy equating to 9 million shares. This share position was price roughly $290 million when CHWY stock rallied on Monday morning before the stock market opened.

Gill also holds a big position in GameStop stock, in fact. Yet, that’s not the one connection between the 2 corporations. Because it seems, GameStop CEO Ryan Cohen founded Chewy.

Perhaps it shouldn’t be a whole surprise that “Roaring Kitty” would decide to own CHWY stock, which soared to $118.68 in February 2021, in the course of the peak of the unique meme-stock boom. The stock ended up falling to a low of $15.44 on May 10, 2024.

Thus, investing in Chewy for the long run wasn’t a successful strategy. A miniature version of the pump-and-dump story arc looked as if it would play out again on Monday morning, as Chewy stock opened at nearly $30 but then plunged to $25 and alter.

This isn’t

For what it’s price, Chewy in 2024 isn’t prone to suffer the identical fate as did within the early 2000s. For those who’re sufficiently old, chances are you’ll recall stock surging and collapsing with the expansion and bursting of the dotcom bubble. may have been too far ahead of its time. Back then, consumers weren’t ready to modify from physical pet-supply stores to an internet platform.

Nevertheless, that was then, and that is now. Chewy is a profitable enterprise, having earned 15 cents per share in its first fiscal quarter, up from 5 cents per share within the year-earlier quarter. Moreover, Chewy’s net sales grew 3.1% 12 months over 12 months to $2.88 billion.

As well as, Chewy CEO Sumit Singh noted that the corporate delivered “record-breaking” adjusted EBITDA in the course of the first quarter. The numbers are impressive, as Chewy reported adjusted EBITDA of $162.9 million, representing a rise of $52.1 million over the figure from the year-earlier quarter.

It’s also sign that Chewy agreed to repurchase $500 million price of its shares from its largest shareholder, Buddy Chester Sub LLC.

“We view this development as one other key indicator that free money flow generation is starting to inflect for CHWY and allowing for newfound capital returns,” Mizuho Americas analyst David Bellinger responded to Chewy’s share-repurchase agreement.

Thus, Chewy doesn’t look like a flash within the pan like was a quarter-century ago. There might actually be an honest value proposition with Chewy stock despite the eye of the meme-stock crowd.

Owning a number of Chewy shares isn’t the worst idea on the planet, so long as you’re buying because you really imagine in the corporate and never simply because “Roaring Kitty” has a position.

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