Could Buying Chewy (CHWY) Stock Today Set You Up for Life?

Chewy (NYSE: CHWY), the largest online pet retailer in the U.S., went public in June 2019 at $22 a share. In February 2021, its stock reached an all-time high of $118.69. At the time, it dazzled its investors with its dominance of its niche market and its explosive growth rates.

However, Chewy's stock trades at just $33 today. It lost its luster as its sales growth decelerated and rising interest rates compressed its valuations. Can Chewy's stock still rebound over the next decade and generate life-changing returns for its patient investors?

Image source: Getty Images.

What happened to Chewy over the past few years?

In fiscal 2020 (which ended in Jan. 2021), Chewy's net sales surged 47%, its number of active customers rose 43%, and its net sales per active customer increased 3%. That pandemic, which drove more people to purchase their pet supplies online, contributed significantly to that growth.

In fiscal 2021, its growth in active customers and net sales slowed down as the pandemic passed. In fiscal 2022 and fiscal 2023, its active customer base declined as rising inflation reduced sales of non-essential pet products. At the same time, it faced tougher competition from Amazon (NASDAQ: AMZN), which expanded its lineup of private-label pet products.

Data source: Chewy. YOY = Year-over-year.

Chewy's post-pandemic slowdown spooked the bulls, but it steadily gained more active customers and grew its net sales per active customer again over the past two years. Its growth in recurring Autoship subscriptions, private label product sales, integrated ads, and pet health insurance plans all locked in its customers and widened its moat against Amazon. It also opened more Vet Care clinics and expanded its paid Chewy+ tier -- which provides free shipping, 5% rewards on most purchases, exclusive offers, and other perks for $79 a year.

In the third quarter of 2025, 83.9% of its net sales came from its Autoship customers. That's up from 79.2% in fiscal 2024 and 76.2% in fiscal 2023. It doesn't disclose its total number of Chewy Plus subscribers, but it claims the premium tier is driving its near-term growth.

Chewy's core business is maturing, but its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin still expanded from 0.9% in fiscal 2021 to 4.8% in fiscal 2024 as it cut costs and grew its net sales per customer. In the first nine months of fiscal 2025, its adjusted EBITDA rose another 80 basis points year over year to 6%.

What will happen to Chewy over the next decade?

From fiscal 2024 to fiscal 2027, analysts expect Chewy's revenue and adjusted EBITDA to grow at a CAGR of 7% and 23%, respectively. That outlook assumes it will gain new active customers, cross-sell more ancillary services, and expand its Autoship and Chewy+ plans.

With an enterprise value of $12.8 billion, Chewy looks like a bargain at 14 times next year's adjusted EBITDA. If it matches analysts' expectations through fiscal 2027, grows its adjusted EBITDA at a CAGR of 15% through fiscal 2035, and trades at a more generous 20 times its adjusted EBITDA, its enterprise value might rise fivefold to $65.2 billion over the next decade.

That would be a solid long-term gain, but it wouldn't be a life-changing one for most investors. Chewy has carved out a defensible niche in the online pet products market, but it still needs to find fresh ways to expand, evolve, and boost its net sales per customer to keep growing.

Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Chewy. The Motley Fool has a disclosure policy.