Chewy Stock Inches Higher Before Earnings

The equity has a history of moving lower after earnings

Deputy Editor
Mar 28, 2022 at 1:23 PM
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Online pet supply retailer Chewy Inc (NYSE:CHWY) is gearing up for its fourth-quarter earnings report, which is due out after the close tomorrow, March 29. Analysts expect Chewy to report a loss of 8 cents per share, and forecast an 18.6% rise in revenue from a year ago. Below, we'll take a look at the equity's chart performance ahead the event, and dig into Chewy's history of movement after earnings.

On the charts, Chewy stock suffered a stint of lower lows over the last 12 months, with the 80-day moving average capping its latest breakout attempt. Additionally, CHWY made headlines to kick off 2022, after Piper Sandler noted a number of headwinds ahead for the stock. The news put the $54 level firmly overhead as a ceiling, and eventually saw the shares hit their lowest level since the broader-market's 2020 pullback. Year-to-date, the shares are down more than 21%, but today were last seen 1.7% higher to trade at $46.52. 

CHWY Chart 2 March 28

Looking back at the company's last eight reports, Chewy stock has seen negative next-day returns in all but one quarter -- a 5.4% pop back in March 2021. CHWY has averaged a post-earnings swing of 6.4%, regardless of direction, and this time around the options pits are pricing in a much bigger move of 21.1%, for Wednesday's trading. 

Options traders are leaning pessimistic toward the equity, according to Chewy stock's Schaeffer's put/call open interest ratio (SOIR) of 1.42. This ratio stands higher than all but 1% of readings in the stock's 12 month range, indicating a put-bias amongst short-term options traders.

Echoing this, CHWY's 50-day put/call volume ratio of 1.13 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 95% of readings from the past 12 months. This shows long puts are being favored over calls at an alarming rate.

Shorts have built positions over the last month, too. Short interest increased 19% in the last two reporting periods, and the 25.46 million shares sold short account for 30.2% of the stock's available float. Simply put, it would take nearly six weeks for shorts to buy back these bearish bets. 

 

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