Shares of the online pet retailer, Chewy, climbed over 6% on Wednesday, as the company overcame lockup expiration worries. Shares rose more than 8% to an intraday high of $27.69 before pulling back slightly.
“There was a lot of angst about this lockup expiration, and to date, obviously, we have not seen any announcements of major share sales,” said Seth Basham, an analyst for Wedbush Securities. “So, that is potentially causing a little bit of a relief rally.”
Chewy broke its sales record recently on both post-Thanksgiving consumer sprees, Black Friday and Cyber Monday, with the latter inaugurating the “single biggest shopping day in our company’s history,” Singh said on the group’s third-quarter earnings call this week.
The online pet retailer took advantage of of fur-parents’ demand for gifts by opening an online Holiday Shop filled with an expanded range of seasonal pet toys, treats, costumes, and clothing, Singh said.
Chewy disseminated word about the sale through website promotions and digital, social media, and email marketing. It also enhanced its recommendation engine to provide more efficient, targeted product suggestions to consumers, as well as doubling down on private-label products such as new holiday toys and dog beds under its Frisco brand.
When Chewy released it’s IPO in June, part of its selling point to investors was the growing trend of “pet humanization.” More than 90% of dog owners and 86% of cat owners believe their pets are a part of their family, according to Packaged Facts, a market-research firm. A subsidiary of PetSmart, Chewy priced its initial public offering of 46,500,000 shares of its Class A common stock at $22 per share.
Following its IPO, the newly public company then joined ETF PAWZ on Friday, June 21. 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.
“PAWZ is the only ETF focused on the pet care industry,” according to Maryland-based ProShares. “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.”
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.
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