Chewy has revealed a better than expected earnings report. Will CHWY stock price rise to new highs?
Chewy Inc (NYSE: CHWY) stock price is 2.72% down today. This fall has occurred as the pet retail giant announced its recent earnings though they were better than it was anticipated by experts.
Adjusted losses of 1 cent per share beat expectations of 16 cents. $1.62 billion in revenues is also a higher figure than the expected $1.53 billion.
At the time of filing this report, Chewy (CHWY) stock price was $50.11. The current market cap is $20.12 billion.
Chewy (CHWY) Stock Falls Though Earnings Beat Expectations
As per the numbers, Chewy is doing better than last year, despite the COVID-19 situation. Revenues have increased by 46% since last year. the operating loss of $47.49 million represents a 56% bigger loss of $30.27 million last year. The net loss of $47.87 million has increased by 62% by $29.55 million last year.
Chewy CEO Sumit Singh said:
“We had a strong start to 2020 with first-quarter net sales increasing 46 percent year-over-year and gross margins expanding 50 basis points. We also achieved a significant milestone by delivering our first-ever quarter of positive adjusted EBITDA.”
The company has also offered guidance for the year. It expects revenue of $6.65 billion up from $6.55 billion. This is still above pundits expectations of $6.41 billion. Earlier, the company had expected revenue to increase this year. This is based on the fact that Americans love their pets.
Pundits are expecting stock prices to read all-time highs this year. This is based on several factors.
The COVID-19 pandemic is a contributing factor to growing demand. As more people stay at home, their attention on their furry friends increases exponentially.
This increase is what is the core driver of growth for Chewy (CHWY) revenues at the moment. Moreso, the strong reliance on e-commerce due to the movement restrictions are also playing strongly into this.
As per the numbers, $46 seems to the pivot that could change things. Prices last week broke out after the $46 to the current levels. Prices could yet again retreat to $46 which will now serve as a psychological level for another breakout. If the prices break below $46, then we could be looking at another testing point of between $40-$42.
This will bring the Chewy (CHWY) stock price into focus. Prices could fall to its IPO prices of $32 or even lower if a selloff occurs. However, the likelihood of such a selloff seems unlikely. This is due to the emotional attachment that Americans have to their pets. The average American is likely to spend more on his pet during times like these.
However, it seems that the bears are out of the fray for now. As dogs wag their tails and cats cuddle in America, Chewy (CHWY) stock appears to be ready to improve across the board