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Chewy Inc. (CHWY) stock soared in the pre-market trading session: here’s why

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Chewy Inc (CHWY) stock recently traded at $80.38 which is a 1.94% upward movement. The CHWY stock previously closed at $78.85. In the pre-market trading session, the CHWY stock soared by 10.48% at the time of writing.

The positive movement in the CHWY stock comes adjacent to the investors reacting on the announcement of the financial report of the Fourth Quarter 2020.

The highlights of Chewy’s (CHWY) past business activities

Chewy Inc. (CHWY) is an online retailer specifically for pet food and other pet-related products.  Chewy is based in Florida and was founded in 2011. The sales of the pet food retailer grew since the year 2014 when the sales grew from $205 million to $423 million.  Chewy had been acquired by PetSmart for $3.35 billion. This was at the time, the largest ever acquisition for an e-commerce business. PetSmart has transferred 20% of its ownership that it had in Chewy to its parent company BC Partners – a private equity firm.

In the year 2017, CHWY stock was doing highly well, with the total revenue of Chewy being around $2 billion and had a market reach of about 51% for online pet food sales in the US. Furthermore, Chewy (CHWY) expanded its portfolio by creating Chewy Pharmacy, which was an innovative pet-specific online pharmacy. There was a team of in-house veterinarians that reviewed and processed the pet-medical orders. In 2019, CHWY sock completed its initial public offering which was very successful, and had earned it an estimate of 1$ billion.

Reviewing CHWY stock’s fourth-quarter financial report

Chewy’s financial report on the Q4-Earnings surprised the investors as it announced a 51% sales gain and has topped the $2 billion quarterly revenue mark. The sales for Q4 were reported at $2.04 billion while the analyst expectations were around $1.96-$1.97 billion. CHWY stock had a net income of about $21 million.

The positivity behind the fourth quarter reported is numerated to a number of reasons. The pandemic was the driver for its online sales, revenue, and as well as online customer base. Chewy saw an increase of 42% in its active customer base year-over-year and now totals at 19.2 million. It customized and improved its CR by launching several marketing initiatives like e-gift cards and telehealth platform that allowed a consulting session with one of their in-house vets. This allowed for 5.7 million additions of net active users in Q4.

Sumit Sing, CEO of Chewy, announced that the net sales increased by 47% from 2019 to $7.15 billion.  CHWY stock has done well this quarter compared to the last-year quarter where it reported a loss of $60.94 million. Chewy has also reported earnings of $0.05 per share.

Will the future of CHWY stock’s long-term trend stay consistent?

Physical retail companies or startups that shifted their whole operation base and business model to online retail during the pandemic mainly saw a rise in their sales and consumer demand. This can be attributed the isolation, stay-at-home and work-from-home trends as well as the convenience of online store shopping that have come to stay in this Covid-era. The main concern that should develop here is, will the market behavior retain the same positive response for online-retail platform in the post Covid era? This question also reflects on the business trends for Chewy (CHWY).

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