Chewy Stock Actually Gained 6.8% in the Second Half of 2022. Is the Worst Over?
Shares of pet products e-commerce company Chewy (NYSE: CHWY) performed much better in the second half of 2022 than in the first half. Whereas it fell 41% in the first half of 2022, it gained 6.8% in the back half and outperformed the 1% gain for the S&P 500, according to data provided by S&P Global Market Intelligence.
Going into 2023, I believe the worst is over for Chewy. But that may not necessarily lead to market-beating gains. Here's why.
As the chart below shows, the market seems to be valuing Chewy stock based on revenue growth. When sales growth spiked in 2020, so too did Chewy's price-to-sales (P/S) valuation. But net sales for Chewy through the first three quarters of 2022 are only up about 14% compared to the comparable period of 2021 and, hence, Chewy's valuation and stock price have dropped.
Source Fool.com
