CHWY heads into its May 27 earnings report with short sellers rebuilding at the fastest pace in months — even as the Street remains broadly bullish.
Short interest has become the defining story of this week. SI as a percentage of the free float jumped from 8.5% at the end of April to 10.3% by May 12 — a 44% increase over the past month and a near-20% rise in the past week alone. That is the highest short positioning in at least six weeks, representing roughly 23 million shares shorted. The move accelerated sharply around May 7-8, well before the earnings date, suggesting deliberate pre-event positioning rather than momentum drift.
The lending market, however, is not flashing a squeeze warning. Availability remains relatively comfortable — borrowing costs are a modest 0.42% annualised, barely changed over the month. That combination — rising short interest alongside easy and cheap borrow — points to a directional bet, not a short squeeze setup. The ORTEX short score climbed to 50.2 from 45.6 at the start of May, its highest reading in the tracked window, confirming the recent build. Options positioning has shifted alongside it: the put/call ratio rose to 0.50, roughly 1.3 standard deviations above its 20-day average of 0.46. That is not an extreme defensive reading, but the direction of travel over the past two weeks is clear — hedging demand has picked up steadily since late April, when the PCR touched its 52-week low of 0.40.
The Street, by contrast, has barely moved off its bullish stance. The analyst consensus remains firmly positive, with a mean price target near $40.90 — roughly 79% above the current price of $22.90. Citi, a bellwether name here, trimmed its target to $37 from $40 on May 12 while holding its Buy rating, the most recent signal of calibrated but intact conviction. Earlier in April, Guggenheim reiterated its Buy at $45. The broader post-Q4 pattern after the March 25 earnings print — when CHWY surged 15% in a day — saw a wave of target reductions from Goldman, JPMorgan, and Citi, yet all maintained positive ratings. The EPS momentum scores are genuinely strong: CHWY ranks in the 88th percentile on forward EPS estimate growth year-over-year, and EPS momentum scores over the past 30 and 90 days sit in the 69th and 72nd percentiles respectively. Bulls point to ChewyVet Care expansion, the Chewy+ membership flywheel, and the recent Modern Animal acquisition. Bears flag execution risk in a price-sensitive pet-products market, supply-chain exposure, and the challenge of sustaining customer acquisition economics against AMZN and Walmart.
Insider activity over the past month adds a note of caution. CEO Sumit Singh sold approximately $2.1 million worth of shares on May 4 at $25.60 — a price meaningfully above the current $22.90 level — following a smaller sale on May 1. The CFO and several other executives also disposed of shares around May 1. Net insider sales over the past 90 days total roughly $4.3 million. These transactions carry low individual significance scores, and scheduled selling plans cannot be ruled out, but the cluster of executive sales at prices above current levels is worth noting in the context of a stock that has fallen 9% over the past month.
The last earnings print, in late March, produced a 15% single-day gain. The one before that saw a 1.7% decline. With short interest now at its highest recent level and options traders more defensive than they have been in weeks, the setup into May 27 is more charged than the calm borrow market might initially suggest. Whether the next print delivers another beat-and-rally — or whether the short build proves prescient — is the question the data is beginning to ask but not yet answering.
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