Thursday saw a dramatic increase in Chewy shares after a mysterious post on social media platform X by Roaring Kitty, also known as Keith Gill. The post, featuring a cartoon dog that resembled the Chewy logo, caused the stocks to soar by as much as 34%. However, the gains were short-lived as the shares later plummeted, ending the session with a 0.5% dip.
It’s worth noting that there is a strong tie between meme stock GameStop and the online pet food retailer Chewy. GameStop’s CEO, Ryan Cohen, was the founder and CEO of Chewy. His involvement in PetSmart’s acquisition of Chewy in 2017 and its subsequent IPO in 2019 has created a significant link between the two companies. Furthermore, Cohen’s transition to the GameStop board of directors in January 2021 played a role in the initial GameStop rally.
The surge in pet retailers such as Chewy and Petco during the pandemic can be attributed to the rise in pet adoptions. With people staying at home, more consumers welcomed cats and dogs into their lives, leading to increased sales of pet-related products. However, as the pandemic subsided and people began to resume normal activities, the demand for discretionary pet items declined. This shift resulted in a drop in revenue from higher margin categories like toys and accessories, compared to pet food sales which remained consistent.
Keith Gill, a former marketer for Massachusetts Mutual Life Insurance, gained notoriety for his role in the GameStop frenzy of 2021. By encouraging retail investors to purchase GameStop shares and call options, Gill orchestrated a squeeze on short-selling hedge funds. His actions sparked widespread interest in the practice of retail trading and led to congressional hearings on brokers’ activities and the gamification of stock markets.
The cryptic social media post by Roaring Kitty had a brief but significant impact on Chewy shares, showcasing the power of online influencers in today’s market. The connection between GameStop and Chewy further underscores the interwoven nature of meme stocks and traditional companies. As the pet retail industry navigates through changing consumer behaviors post-pandemic, companies like Chewy will need to adapt their strategies to continue thriving in the market.