Here's Why Chewy Stock Dropped Today

Source The Motley Fool

Shares of pet e-commerce company Chewy (NYSE: CHWY) dropped on Wednesday after the company's financial results for the third quarter of 2024 missed expectations on the bottom line. As of 11:20 a.m. ET, Chewy stock was down about 8%.

Sales are up but profits fell short of expectations

In Q3, Chewy added about 200,000 net new customers, reaching 20.2 million total. And over the last 12 months, these customers have spent $567 on average compared with an average of $565 in the previous quarter. This customer and spending growth formed the basis of the company's nearly 5% net sales growth, which was slightly ahead of expectations.

Chewy's Q3 gross margin improved to 29.3%, which was good. Moreover, the company had net income of nearly $4 million compared with a $35 million loss in the prior-year period. While improved, investors had hoped for higher profits especially in light of its higher-than-expected sales. That's why Chewy stock dropped today.

Chewy's growth is heating up

I think investors might be missing the forest for the trees with Chewy today. Management just gave guidance for the fourth quarter of 2024, forecasting 13% year-over-year growth. Not only is that better than its 4% growth in the fourth quarter of 2023, this would be Chewy's best growth in nearly two years.

CHWY Operating Revenue (Quarterly YoY Growth) Chart

CHWY Operating Revenue (Quarterly YoY Growth) data by YCharts. Chart doesn't reflect latest quarter.

There are many reasons to like Chewy stock but lackluster growth has held the stock back in recent years. But things could be turning around and I think investors are making a mistake to sell Chewy today. To the contrary, this looks like a buying opportunity to me.

Should you invest $1,000 in Chewy right now?

Before you buy stock in Chewy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chewy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $859,528!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of December 2, 2024

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
What Crypto Whales are Buying For May 2025Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
Author  Beincrypto
Apr 21, Mon
Crypto whales are making bold moves heading into May 2025, and three tokens are standing out: Ethereum (ETH), Artificial Superintelligence Alliance (FET), and Onyxcoin (XCN).
placeholder
Ethereum Price Ready to Surge—$2,000 Level Could Be Within ReachEthereum price started a fresh increase above the $1,800 zone. ETH is now rising and attempting a move above the $1,850 resistance. Ethereum started a fresh recovery wave above the $1,820 resistance.
Author  NewsBTC
May 08, Thu
Ethereum price started a fresh increase above the $1,800 zone. ETH is now rising and attempting a move above the $1,850 resistance. Ethereum started a fresh recovery wave above the $1,820 resistance.
placeholder
Ethereum Price Explodes Past $2,200 with 25% Surge—Momentum Builds FastEthereum price started a fresh surge above the $2,000 zone. ETH is now up over 25% and consolidating gains near the $2,200 zone. Ethereum started a fresh surge above the $2,000 resistance.
Author  NewsBTC
May 09, Fri
Ethereum price started a fresh surge above the $2,000 zone. ETH is now up over 25% and consolidating gains near the $2,200 zone. Ethereum started a fresh surge above the $2,000 resistance.
placeholder
Circle Targets $6.7 Billion Valuation In Ambitious US IPO MoveCircle Internet, the issuer of the USDC stablecoin, announced plans for an initial public offering (IPO) that could value the company at up to $6.71 billion on a fully diluted basis.
Author  Bitcoinist
19 hours ago
Circle Internet, the issuer of the USDC stablecoin, announced plans for an initial public offering (IPO) that could value the company at up to $6.71 billion on a fully diluted basis.
placeholder
Bitcoin 2025 Conference Day One: How Has the Crypto Market Shifted?  The Bitcoin 2025 Conference signals strong regulatory recognition of Bitcoin in the U.S., with growing speculation that the government may increase BTC holdings.
Author  TradingKey
19 hours ago
The Bitcoin 2025 Conference signals strong regulatory recognition of Bitcoin in the U.S., with growing speculation that the government may increase BTC holdings.
goTop
quote