Should You Invest in Chewy?

PHOTO CREDIT: Chewy

OVERVIEW

Chewy incorporation is an online retailer that specializes in selling pet products. A subsidiary of Petsmart, Chewy sells everything from animal food to animal healthcare products. They offer over 60,000 products on their site.

Why You Should?

  1. The COVID-19 Pandemic has greatly benefited the company. Pet-owners do not want to leave the house for shopping and this trend has increased the demand for Chewy. They reported great revenues, an increase in both orders and order values, and an increase in new customers. This will positively benefit the company in the future.
  2. Chewy was seeing a rise in demand before this pandemic as people move to online-shopping over going for in-store shopping. This will positively benefit the company in the future.
  3. The company is building a stronger balance sheet. Over the past couple of financial years, the company has seen an increase in revenues and a decrease in losses. They soon look to become a profitable company. In the financial year of 2020, they reported revenues of 4.85 billion and a loss of around 252 million. Both of these metrics were worse in the financial year of 2019 when the company reported revenues of 3.5 billion and a loss of 268 million.
PHOTO CREDIT: Yahoo Finance

4. Chewy has a large stake in e-commerce for pet products. This industry is expected to grow to over 200 billion dollars by 2025 according to some analysts. This parabolic growth will benefit the company’s sales in the future.

5. Chewy is a fairly recession-proof investment because they sell products essential to all pet owners out there. Their products will always have some demand.

6. The COVID-19 Pandemic has seen an increase in pet ownership across the US. This company will benefit off higher sales due to this market trend.

Why You Should Not?

  1. Chewy still faces competition from large players in the e-commerce industry. Amazon and Walmart are two companies that are rapidly expanding in this space. Customers might flock to these outlets for their pet needs because it is better integrated into their lives than Chewy is.
  2. Chewy is a subsidiary of PetSmart. This parent company relies on in-store traffic and has a decent balance sheet at best. This might be risky for Chewy in the future.
  3. Though Chewy is still improving its finances, they still have to show Wall Street that it can remain profitable. This makes Chewy a risky investment.

MY OPINION

In my opinion, I think that Chewy is a great long term investment because of its unique place in the e-commerce market, A growing industry and increasing pet ownership will benefit this company in the long term. However, the company needs to show investors on Wall Street that it can remain profitable.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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