Online Pet Retailer Chewy Explodes on Q3 Results

Shares of Chewy were soaring as lockup expiration worries faded. The online pet retailer saw gains of over 5% on Wednesday.

The company had reported third quarter financial results also this week and had initially saw a loss in share price after.

Shares rose as much as 8% to an intra-day high of $27.69 on Wednesday with trading volume tripling its 30-day average.

The lockup expiration is a period of time when employees of newly public companies are restricted from selling their stock.

Many were concerned there would be a strong sell off for Chewy.

“There was a lot of angst about this lockup expiration, and to date, obviously, we have not seen any announcements of major share sales,” said Seth Basham, an analyst for Wedbush Securities. “So, that is potentially causing a little bit of a relief rally,” he added.

“People began to digest results a little bit more clearly and say, ‘Listen, there’s actually a more clear path to profitability for this company, unlike a lot of the other internet-based direct-to-consumer brands,’” Basham said, referring to the company’s financial results from Monday.

Chewy reported a third-quarter loss of $79 million, or 20 cents a share, compared with $78.6 million, or 20 cents a share, in the year-ago period.

The company posted an adjusted loss before interest, tax, depreciation and amortization of $30.2 million, and said revenue rose to $1.23 billion from $875.6 million in the year-ago quarter.

Analysts surveyed by FactSet were expecting an adjusted loss BITDA of $31.4 million on revenue of $1.2 billion.
Looking ahead, Chewy expects revenue of $1.33 billion to $1.35 billion for the fourth quarter, and $4.82 billion to $4.84 billion for the year. Analysts had forecast on revenue of $1.32 billion for the fourth quarter, and $4.8 billion for the year.

Shares of Chewy are down over 30% from its all-time high of $41.34.

Disclaimer: We have no position in Chewy Inc. (NYSE: CHWY) and have not been compensated for this article.