CHEWY STOCK FORECAST: Chewy Delivers Strong Fiscal First Quarter Results
Chewy Stock Forecast 2022: Performance of Chewy Stock in 2022
Rising Wedge right into overhead supply w/ a significant volume gap below.
CHEWY Stock Forecast: 2021 Review
|December 30th, 2020||$92.04|
|December 10th, 2021||$50.05|
|February 16th, 2021||$120.00|
|December 30th, 2021||$59.43|
CHEWY Stock Prediction 2022
CHEWY Stock Forecast: Bull Case
- Better Financial First Quarter Results – There is pessimism in the global stock market and every other company is coming up with bad fiscal quarter results. But, Chewy surprised everyone with better than expected results. The revenue was up by 13.7% YoY and came at $2.43 billion against the estimate of $2.41 billion. The main positive indication was in the bottom line growth which was reported at $0.11 profit per share against the expectation of a $0.04 loss. The main reason for the improved results in net sales per active customer came at $445 – an increment of 15% from the last year.
- Better Customer Experiences– There is a number of reasons why Chewy could post these better-expected results. Over the last year, the number of active customers has increased 4.2% to 20.6 million. Also, it has been observed that customers do spend in greater amount as they spend time with the Chewy. The first-year spending of customers is less than $250, which increases to about $700 in the fifth year. The company was able to better the experience of customers through an improved supply chain and reduce costs simultaneously.
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CHEWY Stock Forecast: Bear Case
- No return since debut on the stock market – Although, the last fiscal quarter results are good, the fact remains that Chewy stock has not given any return since its inception on NYSE on 14th June 2019. In the last three years, the stock is down by 17.06% (as of 15.06.2022) and that should be disheartening for investors. In the last one year, the stock is down by about 60%, from a high of $74 on 15th June 2021. Chewy is an online retailer of pet foods and other pet-related products. This is a kind of product that comes under supplementary spending and hence in the environment of higher inflation rates, the revenue dropped for the company and hence the stock price. It is still recovering from the recent falls and there seems to be more pain ahead for the company and the stock.
Chewy Inc is a company on the right path. They have tackled the supply chain issues in a better way in the last quarter, which helped them to price their products in a better way and hence increase the gross margin and revenue significantly. Chewy gross margin increased by 210 basis points in the last quarter sequentially. Also, the pet product market is expanding and is expected to be $93 billion by 2025 compared to $60 billion in 2015. Most importantly, Chewy is trading at only 1.1 times sales at the current share price which is relatively low as compared to other e-commerce companies and S&P sales multiple of 2.6. It is recommended that watch Chewy quarter’s financial results for a few quarters and if they report profit consistently, it is a buy for sure.
Questions and Answers
Q-1 Why is Chewy stock dropping?
Ans – Chewy stock is down by about 45 percent in the last six months and is 62 percent down in the last year (as of 16.06.2022). There are ample reasons, but the primary reason is that the last fiscal year’s financial results were not at par with the expectations. For the fiscal year 2021, the net revenue came at $8.89 billion, which was up by 24%, but it missed the lower end of management estimates slightly by $10 million. Various Wall Street Analysts cut their price targets, for example, Jefferies analyst downgraded the target price to $60 from $90.
Also, another factor for the downfall of the stock is that the company is hit hard by inflation, resulting in a drop in gross margin for the fourth quarter and full fiscal year of 2021. The decline in the operating margin is also due to increased expenditure, as the company is investing back a huge sum of money in its own business. The company’s capital expenditure increased to $183 million.
However, things are changing around in 2022 for Chewy Inc. The revenue also beat the expectations and more importantly, the gross margin has improved significantly in the last quarter. Indeed, the Chewy stock has fallen by about 45 percent in the last six months, but the fall will be restricted if the company continues to deliver better than expected results.
Q-2 Chewy stock chart- Chewy Technical Analysis
The above chart shows the share price for Chewy Inc for last year. The stock has fallen from a high of $87 on 1st April 2022 to $22 on 24th May 2022. Going forward, there are multiple resistances and the upside journey is not going to be easy. But, $22.45 is the next support in the current downtrend. Resistances are also marked in the chart. The first resistance is going to be at $52.17 and if the stock is able to cross that level, $61 will act as the next resistance. $ 80 is the next very strong resistance shown in the chart.
We have to understand that stock is fallen considerably in the past six months and any relief rally on the upside will be hindered by an equivalent sell-off. But on June 15th, 2022, the stock went up by 8.10% for a start. This is the after effect of the better-than-expected fiscal quarter results by Chewy Inc on 1st June 2022. In the last month, the stock is up by 10%. If the company can continue to deliver better than expected results, the stock can regain its lost ground.
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.