Chewy stock swings 34% as ‘Roaring Kitty’ posts dog image

Chewy stock swings 34% as ‘Roaring Kitty’ posts dog image

Chewy stocks had a sharp increase on Thursday following the social media post by meme stock leader Roaring Kitty on platform X that mimicked the online pet food retailer’s logo. Later in the session, though, the gains were swiftly lost.

Chewy, a company that provides pet food and other supplies directly to consumers, had a sharp increase of up to 34% in a single day, the highest since June 2019. Petco saw a 12% increase, causing pauses in volatility in both equities during the move. The rallies were short-lived as Petco barely managed a 0.3% gain and Chewy ended the day down 0.3%.

According to Steve Sosnick, chief analyst at Interactive Brokers LLC, stocks don’t normally rise that much unless there is “normal news” like an announcement of a takeover, upgrade, or repurchase. But in this instance, he said, “it’s a picture of a dog” that’s directing the motions.

Gill became well-known in 2021 when using the online alias “Roaring Kitty,” he mobilized retail investors in support of GameStop Corp., a retailer of video games. Before resurfacing this year, his social media accounts had lain dormant. He posted ambiguous photos and videos, rekindling interest in the so-called meme stocks. He went on to do a livestream earlier this month to discuss the stock after disclosing in a Reddit post that he owned hundreds of millions of dollars in GameStop shares.

Like the first photo he shared in May of a man leaning forward in his seat and clutching a video game controller, his post on Thursday featuring the dog had no words. In a single session, that image sent GameStop’s shares jumping 74%.

GameStop and other meme companies saw a period of volatility following Gill’s return, which was used as leverage by movie theater chain AMC Entertainment Holdings and video game retailer Ryan Cohen, who is also an investor and co-founder of Chewy, to sell shares.

Particularly on Thursday, Chewy has drawn unusually high options volume in previous sessions. As the stock market closed, the volume of calls traded in the company had almost tripled compared to the previous month’s average, driven mostly by a Friday-expiring contract. At a strike price of $45, the call option still has to rise by 55% in order to be profitable.

Pet food sales at Chewy and Petco have been consistently good over the last year or two, but income for higher margin categories has decreased.

In response to emails seeking comment on Thursday’s abrupt swings, Petco and Chewy representatives did not immediately reply.

Read More:

GameStop (GME) shares collapsed as “Roaring Kitty” reappears


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