Chewy IPO Jumps 67%: Buy, Sell or Hold?

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Chewy IPO Jumps 67%: Buy, Sell or Hold?

Stock IPOs are one of Wall Street’s most exciting events.This is the time when shares of a company first become available for to buy. Its a great chance for investors to get in on the ground floor.

Today – I am going to share an exciting new stock IPO that just began trading on the New York Stock Exchange on Friday.

Shares exploded higher for a 67% gain in one day.

Chewy (NYSE: CHWY) is a global leader and one of the largest online pet supply stores in the world. The company was launched in 2011 and calls itself the largest “pure-play pet e-tailer.”

Since its inception this company has exploded.

  • 10,000 full-time employees.
  • Offers 1,600 brands.
  • Has made more than 100 million shipments since inception.
  • Purchased by Petsmart and operates as an independent subsidiary.
  • Logged sales of $3.53 billion in 2018. WOW!
*Chart from Marketwatch
Chewy has seven fulfillment centers across seven states, three customer service centers and two headquarters located in Boston and Miami.

*Chart from Marketwatch

The Chewy IPO Was Red Hot

Demand for Chewy shares was strong.

The expected range was recently raised from $17-$19 to $19 to $21.

First trades ended up going off at $36, more than a 50% premium to the expected range. Shares faded lower during the day but are still up near $34.

Naturally, this big jump has potential investors asking an important question.

Is it too late to buy Chewy?

I don’t think so.

Big picture Chewy is an industry leader in a high-growth industry. I expect sales and earnings to rise for many years.

Secondly, after the IPO Chewy has a market cap of $15 billion. With sales of $3.5 billion in 2018, Chewy has a price to sales ratio of 4.2X.

That looks fairly cheap relative to potential long-term growth.

By comparison, here are some other recent IPOs.

  • Uber: 6X
  • Lyft: 7X
  • Beyond Meat: 77X

I also like the business model of online sales. Reminds me of amazon for pets.

I dig Chewy the company and its stock.

Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.

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