Chewy Stock Rises 5% After Q2 Net Income Jumps 14x: Retail Goes Crazy

Pet food retailer Chewy Inc (CHWY) rose nearly 5% in Wednesday’s pre-market trading and became the top trending stock on Stocktwits after the firm’s second-quarter earnings topped analyst estimates.

Adjusted earnings per share (EPS) came in at $0.24 versus an estimate of $0.02 while revenue rose 2.6% year-over-year (YoY) to $2.86 billion, in line with Wall Street expectations.

Earnings before interest, tax, depreciation, and amortization (EBITDA) rose over 39% YoY to $144.80 million while net income jumped by a whopping 14x to $299 million during the quarter.

CEO Sumit Singh highlighted that the company’s net sales per active customer hit a record of $565. One of the highlights of the quarter came in the form of a 120 basis points YoY rise in gross margins to 29.5%.

In the wake of the upbeat results, retail sentiment on Stocktwits inched-up into the ‘extremely bullish’ territory (84/100), accompanied by ‘extremely high’ message volume (79/100).

Chewy has been improving its bottomline growth consistently. If net income grew 14x in Q2, the first quarter saw the bottomline almost triple to $66.90 million.

The stock had made headlines recently after Keith Gill a.k.a ‘Roaring Kitty’ disclosed a stake in the firm. From a performance point of view, the stock has had a decent year, having gained nearly 16% on a year-to-date basis. Recently, Morgan Stanley raised the price target on the stock to $30 from $28 while maintaining an ‘Overweight’ rating.

Stocktwits users are expressing optimism on the company’s long-term prospects. One user named ‘WhatUPWhatUP’ said Chewy is a great company and is displaying a positive growth trend.

In early August, the stock crossed above its 200-daily moving average for the second time this year, after finding support near the $20-mark. For the next leg of rally, the stock will have to cross its near-term resistance of $30 with conviction.

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