Chewy Plummets 30% in 2026: A Once-in-a-Lifetime Buy?

Overview of Chewy’s Performance

Chewy has shown consistent earnings growth and expanded its revenue streams in recent years. One specific number highlights the loyalty of Chewy’s customers, which is a strong indicator of the company’s success. While there are 10 stocks that some investors might prefer over Chewy, it’s important to understand why this e-commerce company continues to attract attention despite recent stock performance.

Chewy, listed on the New York Stock Exchange under the ticker symbol CHWY, is a company that pets definitely appreciate. It offers a wide range of products, from pet foods to toys and other supplies. However, investor sentiment towards this e-commerce stock has been less favorable recently, with the stock dropping nearly 30% this year.

There isn’t one single reason for this decline. Chewy has managed to grow its business successfully in recent years. A particular metric, which will be discussed shortly, provides investors with a clear view of future revenue, and things look promising. Sometimes, stock declines can be attributed to investors seeking other opportunities at a given time, which doesn’t necessarily reflect the stock’s long-term prospects. It seems that this might be the case with Chewy.

Does all of this mean that Chewy could represent a once-in-a-lifetime buying opportunity right now? Let’s explore further.

Chewy’s Major Milestone

Chewy has consistently delivered revenue growth in recent years and reached a significant milestone: profitability. Initially, the company focused on e-commerce within the United States. However, it has since expanded its e-commerce operations into Canada and, within the U.S., added veterinary clinics to its services.

The introduction of veterinary clinics is a strategic move that diversifies the revenue stream. It also allows Chewy to attract new customers who may not have previously discovered or used its e-commerce platform. These clinics serve as an excellent way to introduce Chewy to pet owners who haven’t yet tried the online store.

The Power of Autoship

One of the aspects I find most appealing about Chewy is that more than 80% of its total sales come from recurring customers. This is primarily due to the Autoship service, which automatically delivers favorite products on a schedule set by the customer. The fact that regular customers drive sales is a positive sign, offering visibility into future sales and indicating that customers value Chewy enough to keep returning.

As mentioned earlier, these factors aren’t fully reflected in Chewy’s current stock performance. This has led to the stock trading at 15x forward earnings estimates, a decrease from over 30x just a year ago. Considering the points outlined above, this valuation level is quite reasonable.

It’s difficult to predict exactly when Chewy’s stock will rebound and increase in value. However, the company has the necessary elements to succeed over the long term: a track record of revenue growth, successful expansion, and a loyal customer base driving growth. All of these factors make Chewy a compelling stock for long-term investment. And with today’s valuation, it could potentially be a once-in-a-lifetime buying opportunity.

Should You Buy Stock in Chewy Right Now?

Before deciding to invest in Chewy, consider the following:

The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to buy now. Interestingly, Chewy was not among them. These 10 stocks have the potential to deliver significant returns in the coming years.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy. The Motley Fool has a disclosure policy.