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CHWY has spent the past week in an unusual position: the stock gained 11% while shorts barely moved, and options traders turned notably less defensive, a combination that sharpens the question of which side is reading the next six weeks correctly ahead of the December 2 earnings date.
The shift in options tone is the clearest change from last week's note. The put/call ratio has dropped to 0.68, more than 1.6 standard deviations below its 20-day average of 0.77, and the lowest reading in several weeks. That is a sharp reversal from the defensive posture that characterised the prior two notes, where heavy put demand was the defining positioning feature. Calls are now dominating the flow. Whether that reflects conviction ahead of December or simply short-term traders chasing the 11% weekly rally, the signal is unmistakable: options traders are no longer braced for a quick drop.
Short interest, by contrast, has barely budged. The position edged down 1.1% on the day to 31.0 million shares, or 13.8% of free float. That is essentially unchanged from the 14.0% reported in Thursday's note. The weekly change is still up 36.9%, reflecting the aggressive rebuild that took place earlier this week. Bears added heavily into the rally and have not covered. The borrow market remains completely unconstrained: availability sits at 435%, meaning more than four shares are available to lend for every one currently borrowed, and the cost to borrow is 0.43%, near the bottom of its six-week range. Shorts are dug in, they are comfortable, and there is no mechanical pressure forcing their hand before earnings.
The Street picture has not materially changed since the wave of post-earnings analyst cuts in early September. Most major names, Goldman Sachs with a Buy and a $30 target, Morgan Stanley at Overweight with $36, and RBC and TD Cowen both at Outperform, maintained positive ratings while trimming targets. JPMorgan moved to the sidelines in September, downgrading to Neutral at $24. The consensus is Hold, with the mean target well above the current $20.97 close, suggesting the Street still sees value but has lowered its near-term expectations. The bull case rests on Autoship capturing 84.6% of sales, active customers growing for a seventh consecutive quarter, and expanding adjacencies in pharmacy, advertising, and vet services. Bears point to modest organic growth of 5.7% in Q2, management warnings on gross margin normalization, and competition from better-capitalised players. Chewy's EV/EBITDA is running near 8x, not a demanding multiple if margin expansion holds, but a vulnerable one if the Q3 gross margin compression management flagged proves deeper than guided.
One data point worth noting from ORTEX's alt data layer: Chewy's buyback activity reached $200 million in Q2 2026, up 766% on the same quarter last year and the largest Q2 buyback on record in the dataset going back to 2024. That is a meaningful capital allocation signal from management at a time when the stock trades well below where most analysts think it should. Retail attention is also elevated, with the Wikipedia-views signal running at a z-score of 1.5 against its own 90-day history, the highest in recent weeks, consistent with the surge in price and the volume of discussion around the stock.
On prior earnings, the pattern has been painful for longs. The two most recent prints both produced next-day losses of roughly 7.7% and 9.4%, with the five-day moves even worse at minus 2.1% and minus 10.1% respectively. With the ORTEX short score at 59.1 and 13.8% of float still short, the key tension into December 2 is whether the options market's newly bullish tilt reflects genuine re-rating or simply momentum chasing, and whether the bears who rebuilt aggressively this week will find validation in the Q3 gross margin line management itself flagged as a risk.
See the live data behind this article on ORTEX.
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