Key insights
- The author is bullish on Chewy (CHWY), citing its high recurring revenue, net cash position, and expansion into pet care. They believe the recent stock drop due to concerns about consumer spending is an overreaction, as pet care is less discretionary. The author sees potential for valuation upside based on efficiencies from AI and pet care integration.
![CHWY [Chewy] is the Next LION [Lionsgate] and Here is Why...](/_next/image?url=%2Fimages%2Freddit.png&w=3840&q=75)
Here we go, again... after moving on from LION - I have picked my next 12-month forecast stock.
Chewy. $CHWY - the only negative is it was founded by Ryan Cohen, the rest is a positive story.
80% recurring revenue, essentially no debt, net cash position, 12 billion in annual sales (80% of which are auto-ship) - expansion into pet care, etc. The stock dropped 10% today on news that the CEO said the 'consumers' are stretched. What are you going to do, let your pet die? Boil chicken that is about to expire to offset the cost of kibble? They still need food, treats, toys, medication & more! Chewy revenue is more recurring than buying hand made goods on $ETSY - and their selection is still way more robust than Amazon $AMZN and fairly priced.
You really don't have other options in the current market, going to Petco is if you forgot to order a one-off item, and you're paying a premium for almost everything over Chewy.
Gen Z loves their dogs over expansion of population with human legs - I don't see this company fairly valued and believe it should be a $14-18 billion E/V based purely on efficiencies they can create integration AI and pet care. Their active shopping base is huge.
My position is 500 6-month contracts & 50,000 shares.
I know this post is a bit sarcastic, but the point is, at its core, a bit unique compared to other 'discretionary' marketplaces - your pet is not discretionary.