Why Chewy Stock Crashed Today

Core Viewpoint - Chewy's stock has declined significantly despite beating analyst expectations for both earnings and sales, indicating investor dissatisfaction with the company's financial performance [1][5]. Financial Performance - Chewy reported adjusted earnings of $0.35 per share and sales exceeding $3.1 billion, surpassing analyst forecasts of $0.34 per share and just under $3.1 billion in sales [1][3]. - Year-over-year sales growth was 8%, but the gross profit margin decreased, and the net profit margin fell by 30 basis points to 2% [3][4]. - The reported earnings of $0.35 were non-GAAP; the actual GAAP earnings were only $0.15 per share, remaining flat year-over-year despite sales growth [3][4]. - Free cash flow for the quarter was $48.7 million, down 7% year-over-year and 22% below reported net income, indicating a cash profit of only $0.78 for every $1 in GAAP earnings [4]. Market Reaction - The stock price fell by 10% shortly after the earnings report, reflecting investor disappointment with the company's performance metrics [1][5]. - Chewy's stock is currently valued at 51 times trailing earnings, with sales growth in the single digits and declining free cash flow, raising concerns about its investment attractiveness [5][6].