Nataba
Introduction
Chewy, Inc. (NYSE:CHWY) stock has jumped over 25% this past month, and suddenly, the interest around it has grown as well. The valuation looks very expensive, but it is nowhere near the levels we saw last year.
The
Chewy Q1 Preview: I Wanted To Buy This Stock, Then I Saw The Financials
Summary
- Chewy's brand and recurring revenue model are impressive, with strong customer loyalty and expansion into Canada and new services like vet clinics and pharmacies.
- Despite stellar revenue growth and customer engagement, profitability is weak, with razor-thin net margins and excessive stock-based compensation eating up most of the profits.
- Operational inefficiencies, lack of cost discipline, and high valuation multiples make the stock unattractive until management demonstrates a commitment to financial health.
- While I love the brand and want to be a buyer, I can't justify investing in CHWY stock until I see improved margins, cost control, and a more reasonable valuation.
I’m passionate about finance and investing, focusing on business analysis, fundamental analysis, valuation, and long-term growth, especially in sectors like AI, fintech, finance and tech. I study finance and economy and have hands-on experience in equity research, financial modeling, and creating investment content. I actively analyze publicly traded companies with a focus on business models, earnings performance, and competitive positioning. I also run a finance-focused YouTube channel called “The Market Monkeys”, where I share my thoughts on investment strategies, earnings reports, and market trends. I joined Seeking Alpha to contribute thoughtful, research-backed analysis that helps other investors make better decisions. My goal is to offer clear, unbiased insights into companies' strengths, risks, and valuation to help readers to build their unique opinion and investment strategy.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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