CHWY Stock Slides Ahead of Earnings

The online pet supply retailer is expected to report earnings after the close this evening

Online pet supply retailer Chewy Inc (NYSE:CHWY) has, for the most part, been breezing past every dramatic broad-market pullback caused by the coronavirus, climbing higher and even hitting an eight-month peak of $39.63 on March 30. Since then, the shares have cooled slightly, down 1.8% at $35.34 during today's trading, just ahead of the firm's fiscal fourth-quarter earnings report, which is due out after the close today.

Looking back at Chewy's last three reports since going public back in June of last year, the stock has suffered two negative next-day returns, and has averaged a post-earnings swing of 6.1%, regardless of direction. This time around the options pits are pricing in a much bigger move of 17.1%.

Speaking of options pits, calls are running at a slightly quicker-than-usual clip today. So far, 3,324 calls have exchanged hands -- 1.7 times what is typically seen at this point -- compared to just 908 puts. The weekly 4/3 40-strike call is the most popular, followed by the 31-strike put from the same series, with positions being opened at the latter.

This penchant for calls isn't unusual for CHWY, in the last 10 days, 13,540 calls have been picked up compared to 4,794 puts. Meanwhile, short interest is starting to ebb on the e-tailer, down 4.4% in the last reporting period, though short sellers are still firmly in control, with the 12.12 million shares sold short making up 26.8% of the stock's available float, or nearly a week at its average daily pace of trading.

The brokerage bunch has also taken a bullish stance on CHWY, with 10 of the 13 analysts in coverage sporting a "buy" or better rating, with not a "sell" to be seen. Meanwhile, its consensus 12-month price target of $37.64 is a slim 6.8% premium to current levels.