Prediction: Investors Who Buy the Dip in Chewy's Stock Will Be Rewarded

Core Viewpoint - Chewy's share prices fell 10.3% following earnings release despite exceeding sales expectations and raising full-year revenue outlook, primarily due to higher-than-expected operating expenses impacting EBITDA [1][2]. Financial Performance - Revenue for Chewy in the fiscal second quarter reached $3.1 billion, reflecting a nearly 9% year-over-year increase, surpassing the forecast of $3.06 billion to $3.09 billion [4]. - Autoship sales, which account for over 80% of total revenue, increased nearly 15% year-over-year to $2.6 billion, with net sales per active customer rising 5% to $591 [5]. Operating Metrics - Gross margin improved by 90 basis points year-over-year and 80 basis points sequentially, attributed to the growth in the sponsored ads business and higher-margin product sales [6]. - Operating expenses rose over 7% year-over-year, with selling, general, and administration (SG&A) costs climbing 8%, leading to concerns about the company's operating leverage [7]. Management Outlook - Management anticipates modest SG&A leverage for the year, with expectations for SG&A expense growth to moderate in the latter half of the year [8].