Branding Chewy a meme stock is bad for the pet retailer, according to Wall Street analysts

by | Jul 1, 2024 | Financial

Chewy shares started swinging wildly after online personality Roaring Kitty revealed a big stake , but Wall Street analysts believe being branded as a meme stock is not good for the pet retailer. The meme stock leader, whose legal name is Keith Gill, has taken a 6.6% stake in Chewy, making him the third-largest shareholder. An initial boost in the share price — it surged 18% in a two-day span early last week — has quickly faded, with shares falling more than 5% Monday. While Chewy is in a much better place fundamentally than GameStop or AMC , analysts said the elevated volatility and the potential meme status could hurt the retailer, whose stock surged during the pandemic and retreated afterward. “We view this morning’s share price move and additional volatility as a potential exit opportunity for investors,” said David Bellinger, a Mizuho analyst with a neutral rating on Chewy. “[A]n escalating, unpredictable, and difficult to track news flow may result in a narrower institutional investor base and growing hesitation to own shares and/or increasing likelihood to exit current positions,” he wrote in a report. Selling from the biggest backer Meanwhile, Chewy’s share price has also been affected by sales of stock from the private equity firm BC Partners that is its largest shareholder. The firm recently sold 17.6 million of its shares back to Chewy for $500 million. …

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[mwai_chat context=”Let’s have a discussion about this article:nnChewy shares started swinging wildly after online personality Roaring Kitty revealed a big stake , but Wall Street analysts believe being branded as a meme stock is not good for the pet retailer. The meme stock leader, whose legal name is Keith Gill, has taken a 6.6% stake in Chewy, making him the third-largest shareholder. An initial boost in the share price — it surged 18% in a two-day span early last week — has quickly faded, with shares falling more than 5% Monday. While Chewy is in a much better place fundamentally than GameStop or AMC , analysts said the elevated volatility and the potential meme status could hurt the retailer, whose stock surged during the pandemic and retreated afterward. “We view this morning’s share price move and additional volatility as a potential exit opportunity for investors,” said David Bellinger, a Mizuho analyst with a neutral rating on Chewy. “[A]n escalating, unpredictable, and difficult to track news flow may result in a narrower institutional investor base and growing hesitation to own shares and/or increasing likelihood to exit current positions,” he wrote in a report. Selling from the biggest backer Meanwhile, Chewy’s share price has also been affected by sales of stock from the private equity firm BC Partners that is its largest shareholder. The firm recently sold 17.6 million of its shares back to Chewy for $500 million. …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
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