What Happened?
Shares of e-commerce pet food and supplies retailer Chewy (NYSE: CHWY) fell 6.4% in the afternoon session after the company lowered its fiscal 2026 sales outlook after reporting first-quarter results, pointing to softer consumer spending.
Although first-quarter results were reportedly upbeat, the company reduced its full-year revenue forecast to a range of $13.4 billion to $13.55 billion, which was below its prior forecast and analysts' estimates.
Chief Executive Officer Sumit Singh stated that business was solid for most of the quarter, but consumer conditions weakened later in the period. Singh specifically noted pressure on the sale of premium products. Following the announcement, some analysts adjusted their outlooks, with TD Cowen, for example, lowering its price target on the stock, citing the weaker macroeconomic environment.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Chewy? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Chewy’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 23 days ago when the stock dropped 8.2% on the news that investors grew increasingly concerned about persistent inflation and rising bond yields, raising worries about future Federal Reserve policy.
The pressure on equities became more pronounced following a significant move in the U.S. bond market, where the 10-year Treasury yield held near 4.60% and the 30-year yield pushed past 5.1%, a level not seen since 2007. These higher yields reflect investor anxiety that stubborn inflation, potentially worsened by geopolitical tensions, could force the Federal Reserve to delay anticipated interest rate cuts.
Higher rates make bonds more attractive relative to stocks and reduce the present value of future corporate earnings, which weighs on stock valuations, particularly for the technology sector. Investors are now looking ahead to the upcoming release of the Fed's minutes for further guidance.
Chewy is down 43.8% since the beginning of the year, and at $18.83 per share, it is trading 56.6% below its 52-week high of $43.43 from June 2025. Investors who bought $1,000 worth of Chewy’s shares 5 years ago would now be looking at only $251.97.
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