Core Insights - The stock market has recently experienced a decline, with the S&P 500 index down 3.3% over the last month, and growth stocks losing 4.5% during the same period [1] - Chewy's share price has fallen more than 3.7% over the last month, but the company's long-term prospects remain positive [2] Industry Growth - The U.S. pet market has seen sales increase by approximately 5% in 2024, reaching $151 billion, with projections of 4% annual growth through 2028 [5] - Online sales in the pet market have grown significantly, capturing a 37% market share in 2023, up from 20% in 2018 [5] Company Performance - Chewy has experienced a notable increase in sales growth, with a 14.9% rise to $3.2 billion in its fiscal fourth quarter [7] - The number of active customers for Chewy reached 20.5 million, reflecting over a 2% increase year-over-year, and sales per active customer rose from $555 to $578 [7] - Sales to Autoship customers increased over 21% to $2.6 billion, contributing to a gross margin expansion of 0.3 percentage points to 28.5% in the fourth quarter [8] Growth Opportunities - Chewy's management is actively pursuing growth by increasing advertising and marketing spending by over 8% last year and enhancing the site and app experience [9] - The company has launched in-person veterinary clinics, which represent a natural extension of its existing business [9] Valuation - The recent drop in Chewy's stock price has resulted in a more attractive valuation, with a price-to-earnings (P/E) ratio of 37, down from over 42 at the beginning of February [10] - Despite the lower P/E ratio, Chewy's growth prospects justify a higher valuation compared to the overall market P/E of 29 [11] Long-term Outlook - Although Chewy's stock has experienced volatility since the pandemic, the company is now on a stronger footing with growth opportunities ahead, making it an appealing option for long-term investors [12]