Chewy IPO Finds Its Way Into ProShares Pet Care ETF

The ProShares Pet Care ETF (CBOE: PAWZ) debuted last November as the first exchange traded fund (ETF) dedicated to the pet care industry and related investment opportunities. Now, the high-flying PAWZ is making room for one of the pet care industry’s most widely anticipated new stocks: Chewy, Inc. (NYSE: CHWY).

Earlier this month, Chewy Inc (CHWY), a subsidiary of PetSmart, priced the initial public offering of 46,500,000 shares of its Class A common stock at $22 per share. The newly public company joined PAWZ on Friday, June 21.

“PAWZ is the only ETF focused on the pet care industry,” said Maryland-based ProShares in a statement out Friday. “It gives investors the opportunity to gain broad exposure to public companies in the global pet care industry—companies like Chewy that stand to potentially benefit from the proliferation of pet ownership and the emerging trends affecting how we care for our pets.”

PAWZ ETF Potential

PAWZ includes sectors such as veterinary pharmaceuticals, diagnostics, services, and product distributors; pet and pet supply stores, and pet food and supply manufacturing. Heavy on companies with exposure to the pet healthcare industry, PAWZ is beating the largest traditional healthcare ETF by a margin of more than 2-to-1 this year.

Chewy’s addition to PAWZ brings the ETF’s roster to 26 stocks. Chewy’s “wide assortment of products, competitive product prices, customizable and convenient automatic reordering, quick and efficient order delivery and top-notch customer service create a compelling customer value proposition, leading Chewy to capture a remarkable two-thirds of the online pet care industry’s rapid annual sales growth in recent years,” Wedbush analyst Seth Basham told Barron’s.

The global pet care industry could see a whopping $203 billion in sales by 2025.

“Chewy’s IPO offers further evidence of investor interest in the pet care industry, driven by the global trend of the humanization of pets,” said Steve Cohen, managing director at ProShares, in a statement. “Investors are recognizing that pets are more than just loyal companions. They are big business.”

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