CHWY heads into its August 26 earnings date with an unusual tension: the stock is up 8% on the week, yet short sellers are rebuilding positions at the fastest pace in months.
Short interest has become the dominant story this week. Bears have added aggressively — SI climbed 18% over the past five sessions to reach 14% of the free float, now representing roughly 31.6 million shares. That pace of accumulation is striking against a backdrop where the stock itself is rallying. A month ago SI was running closer to 12% of float; the current level marks a meaningful step higher. The ORTEX short score reflects the shift, climbing from 54 in mid-July to 59.8, its highest reading of the tracked period.
The borrow market, however, tells a different story about the intensity of that conviction. Despite the surge in shares short, availability remains extremely loose — currently at 367%, meaning there are more than three-and-a-half shares available to borrow for every one already lent out. That compares to levels above 1,100% as recently as late June, so the lending pool has tightened noticeably over the past six weeks. But cost to borrow is running at just 0.50%, down roughly 13% on the week, and availability ranks in only the 34th percentile relative to the broader universe. The borrow market is tighter than it was, but it is not squeezed — new short positions remain cheap and accessible. Options positioning is neutral to mildly defensive: the put/call ratio is 0.675, just under one standard deviation above its 20-day average of 0.649, and nowhere near its 52-week high of 1.06. Neither the borrow nor the options market is flashing the kind of extreme signal that would amplify the short rebuild into something more urgent.
The Street's current read on the stock is cautiously optimistic on fundamentals but meaningfully less enthusiastic on valuation. Analyst targets were cut broadly following the June earnings miss — Goldman maintained its Buy but trimmed its target from $46 to $34; JP Morgan held Overweight but moved from $35 to $29; and the broader cohort, including Barclays, RBC, TD Cowen, and Baird, all kept positive ratings while pulling targets sharply lower. The consensus target now sits around $31, implying about 37% upside to the current $22.60 price. The forward earnings picture is actually improving — the 12-month forward EPS growth rank is in the 89th percentile, and the PE has drifted to roughly 13x on a trailing basis — but the short score rank sits in just the 11th percentile, meaning CHWY scores worse than almost 90% of comparable names on short-side pressure. The bull case centres on autoship momentum and margin expansion; the bear case points to decelerating pet category growth and competitive pressure from larger platforms.
The most recent earnings history adds relevant context. The June 10 print produced a sharp -8% one-day move and a -13% five-day reaction, a notably negative outcome that prompted the wave of analyst target cuts that followed. The prior report in early July saw a more modest +1.6% one-day move with a +4.7% five-day drift. Given that the next event is August 26, the current short rebuild may reflect positioning ahead of that release rather than a straightforward directional view on the stock.
What to watch into the August 26 report: whether short interest continues to climb through the earnings window, and whether the borrow market — currently loose but tightening — begins to reflect more competitive demand for shares as that date approaches.
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