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soft (NYSE: CHWY) was a big winner during the pandemic, but the stock is actually down this year. A combination of a massive sell-off in growth stocks and a deceleration in its growth rate has pushed the stock lower this year.
In this episode of “Upgrade or Topgrade” recorded on October 15, Fool contributors Jeremy Bowman and Parkev Tatevosian and Millionacres editor-in-chief Deidre Woollard discuss the pressure on Chewy and how the title is positioned for the long term.
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Deidre Woollard: Why is the market disliking this action right now? Was it just that everything had been down for a little while or do you think something else is going on here?
Jérémy Bowman: I’ll weigh a second. I think there is a combination of factors with Chewy. I think growth stocks have been hit. There was some noise with interest rates and just general concerns about a market pullback, and then we have these pet stocks – I mean, Chewy enjoyed two booms during the pandemic. There was pet food and products, and then there was e-commerce as well. I think there is this realization that we saw some pretty hyper growth in the business last year. It will subside and we reach a state of equilibrium in the future.
Oldest boy : I think that makes sense. Before I get on to some of the other pet stocks, I just want to bring up this thing that I think is interesting with Chewy. I am not a chewy investor. I wasn’t a huge Chewy fan at first, although Emily Flippen pretty much sold me for it. But the thing, I think, that they do that is interesting is the practice center, which is their market for the vets. What’s interesting is that vets can basically choose to list their items on chewy.com. They can set prices, set up pre-approved prescriptions, prescription food, things like that, and then they earn income if customers place an order at their clinic or buy from them through Chewy. It’s really interesting to me because they have this prescription pet product, which is already in use in about 8,000 clinics across the country, and I feel like that’s an area of. growth which is really interesting. Combines with the composition we talked about earlier.
Parkev Tatevosian: Great point. It’s really, again, following some of the steps that Amazon follows by trying to attract more third party sellers to its platform. Interestingly, they are starting this service. It’s free for vets to start with, but I can imagine them trying to monetize it somehow. Maybe not in the short term, but maybe in the medium or long term.
Oldest boy : Interesting. It makes me wonder if there would be a way for them to go ahead even trying to mark it blank as an app for the clinic or something like that, or maybe team up. with clinics because I think there are more options out there than I think. really explored yet and that’s one of the things that I think is the challenge for them because it seems like it’s a company that was really doing one thing and now trying to get into other areas .
Deidre Woollard has no position in the stocks mentioned. Jeremy Bowman has no position in the stocks mentioned. Parkev Tatevosian owns shares of Chewy, Inc. The Motley Fool owns shares and recommends Chewy, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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