Chewy Earnings Today: Options Market Braces for Drop
Chewy reports Q4 after market open with a 3:1 put-to-call ratio signaling bearish positioning. Analysts expect flat revenue at $3.26 billion.
The options market isn't feeling bullish about Chewy.
The pet products e-commerce company reports fiscal Q4 results Wednesday morning, and traders have loaded up on puts. Put volume hit 22,581 contracts Monday—39% above the average—creating a roughly 3:1 put-to-call ratio. We flagged this positioning yesterday, and it's only grown more pronounced.
Chewy shares closed at $23.45 Tuesday, down from $28 in early March. The stock is off 35% from its 52-week high.
What Analysts Expect
Wall Street is looking for:
- EPS: $0.28, flat year-over-year
- Revenue: $3.26 billion, up 0.3%
- Active customers: 21.27 million, up from 20.51 million
The revenue growth deceleration is stark. This time last year, Chewy posted 14.9% top-line growth. Now analysts expect essentially flat sales. The pet spending boom that lifted the stock during 2020-2021 has fully normalized.
Why the Bearish Positioning
Several factors explain the put buying:
Autoship concerns — Chewy's subscription model (customers set recurring deliveries) has been the business's anchor. Any weakness in autoship retention or order frequency would signal trouble.
Margin pressure — Pet food prices have stabilized after the inflation spike, which sounds good but actually compresses Chewy's pricing power. The company may struggle to pass through rising fulfillment costs.
Veterinary overhang — Chewy has invested heavily in telehealth and pharmacy services. These are higher-margin but require customer adoption that's been slower than hoped.
Valuation — Even at $23, Chewy trades at roughly 35x forward earnings for a business growing revenue in the low single digits. That's a lot of faith in a turnaround.
The Bull Case
It's not all negative. Management has been cutting costs aggressively, and gross margins have expanded for three straight quarters. Active customer counts are still growing, just slowly. And the pet care industry does have defensive characteristics—people keep feeding their dogs even in recessions.
If Chewy surprises with better-than-expected guidance or announces new cost initiatives, the put-heavy positioning could unwind quickly. Crowded short trades sometimes produce violent squeezes.
What to Watch
Beyond headline numbers:
- Autoship customer growth and retention metrics
- Gross margin trajectory—did the Q3 expansion continue?
- Full-year guidance for fiscal 2027
- Cash flow and any commentary on capital allocation
The FedEx results last week showed that beaten-down logistics and e-commerce names can rally hard on good news. But Chewy needs to deliver more than a modest beat—it needs to convince investors the growth story isn't over.
Results expected shortly after market open. The call is at 8:00 a.m. Eastern.