Chewy shares shot up as much as 85% on Friday morning in a sign that the pet care industry has legs. The solid public debut of the online pet care retailer makes a strong investment case for the pet care industry and funds like the ProShares Pet Care ETF (PAWZ).
On Thursday, 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. At 11:30am ET Friday, shares had shot up to almost $41 per share before closing the day at $34.99 per share.
“The Chewy investment case has aligned with all of the things we know about the industry,” said Simeon Hyman, Global Investment Strategist at ProShares. “The fact that Chewy calls their clients ‘pet parents’ is the best connection between the way we think about the key trends that are driving the pet care industry.”
Among those trends, “seven out of 10 U.S. households today have pets, more than have children, and owners are providing pets with premium foods, luxury services, state-of-the-art health care, insurance policies and more,” according to ProShares.
What’s more is the pet care industry could reach $203 billion in global sales by 2025, growing every year since 2001, even during the Great Recession.
The growth potential is there, and Chewy is a just a piece of the pet care industry opportunity.
“In PAWZ and the pet care index that we follow, we include the broad industry and not just the retailers,” said Hyman. “There are the supply and food manufacturers and the all-important pet healthcare piece of the puzzle. Those are all represented in the ETF.”
PAWZ includes sectors such as veterinary pharmaceuticals, diagnostics, services, and product distributors; pet and pet supply stores, and pet food and supply manufacturing.
Hyman says the Chewy IPO is a great proof point for the pet care industry and sees an even broader opportunity represented in the PAWZ ETF.
For more investment opportunities, visit our Core ETF Channel.