CHWY heads into its Q1 FY2027 earnings report on May 27 with short sellers at their most aggressive in months, even as the options market and a broadly bullish analyst consensus pull in the opposite direction.
Short interest has climbed sharply — up 25% over the past month to 10.5% of the free float, a level that marks a meaningful escalation from the mid-to-high single digits where it sat through most of April. The recent pace has been notable: shorts added exposure almost every week from late April through late May, with shares short now at roughly 23.7 million. Despite that buildup, borrow conditions remain undemanding. The cost to borrow has actually fallen sharply, dropping 37% over the past week to just 0.30% annualised. Availability is wide at roughly 695% of short interest, well above the 52-week trough of 511% — meaning the lending pool is far from strained and new shorts face no friction entering the trade. The ORTEX short score of 55 reflects this mixed read: elevated relative to recent history, but nowhere near the extreme territory that typically precedes a squeeze.
Options positioning tells a more cautious story heading into today. The put/call ratio has risen to 0.80 — nearly 1.8 standard deviations above its 20-day average of 0.57, and among the more defensive readings of the past year (the 52-week high is 1.06). That shift arrived in the past two weeks, coinciding with the stock's 18% drop over the past month to $21.25. The stock has stabilised recently, recovering 8% over the past week, but options traders are still leaning toward protection rather than participation.
The bulls have not abandoned the name. Morgan Stanley and Barclays both lowered their price targets on May 26 — to $43 and $40 respectively — but held Overweight ratings. That pattern echoes the wider analyst cohort: Citigroup trimmed to $37 in mid-May, while Guggenheim has reiterated Buy at $45 twice in recent weeks. The consensus mean target of $39.85 represents an 88% premium to the current price, a gap that reflects genuine conviction on the Street even after a string of downward revisions. Bulls focus on Chewy's vet clinic and telemedicine expansion as durable growth drivers beyond the core autoship model. Bears counter that the competitive threat from Amazon and Walmart is structural, and that a gross margin of roughly 29.6% leaves thin room for error if promotional intensity rises. With EV/EBITDA running near 8.3x on trailing twelve months, the valuation has de-rated materially but the P/E at 11.8x (on the snapshot's estimated basis) suggests the market still expects meaningful earnings progress.
Insider activity adds a cautionary footnote. CEO Sumit Singh sold over $2.1 million worth of stock on May 4, part of a broader cluster of executive sales that pushed net 90-day insider value sold to roughly $4.3 million. These are not panic-scale disposals, but the direction is consistent. One prior earnings event worth noting: the last print on March 25 produced a one-day gain of 15% and a five-day move of nearly 14% — suggesting the stock can move violently on a positive surprise. The print will test whether the growth trajectory justifies a stock sitting nearly 50% below consensus targets, and whether the recent short build is a well-reasoned hedge or an overcrowded position running into a repeat of March.
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