CHWY exits its post-earnings week with short sellers holding firm and a parade of analyst target cuts — yet the stock's next earnings report is now just days away, keeping the pressure squarely on.
Short interest has not retreated meaningfully since the May 27 print. Shares short edged down 3% on June 2 to 26.4 million, but the monthly picture tells the real story: SI has risen 40% over the past month to 11.7% of the free float, up from roughly 8.4% at the end of April. That is a genuine escalation — not noise. The ORTEX short score of 54.8 reflects a moderately pressured setup, though it has eased slightly from a peak of 58.8 on May 27, the day of the last earnings report. Borrow conditions remain remarkably relaxed for a stock this shorted. The cost to borrow is just 0.43% annualised, down 15% on the week, and availability is extremely wide at 816% of short interest — meaning for every share already borrowed, more than eight more are ready to lend. There is no friction for new shorts, and no squeeze dynamic in the lending market.
Options positioning has turned more defensive than it was a month ago. The put/call ratio is running at 0.79, a full standard deviation above its 20-day average of 0.65 and close to its 52-week high of 1.06. This is a notable shift: in late April and early May, the PCR was running below 0.50, reflecting a more bullish tilt. The move higher into and through earnings suggests options traders are carrying more downside protection heading into the June 10 report than they did into the May one.
Analyst sentiment is broadly constructive but the direction of travel on price targets is uniformly lower. Mizuho cut its target to $40 from $50 on June 3, maintaining Outperform. JP Morgan's Doug Anmuth trimmed to $35 from $40 on June 2, keeping Overweight. Morgan Stanley and Barclays each lowered targets the week prior — to $43 and $40 respectively — while holding positive ratings. Every recent revision has been a cut. The consensus target now sits at $39.10, which implies an 82% premium to the June 2 close of $21.47. That gap is large enough to flag: the mean target likely reflects a range of vintage forecasts and the recent wave of cuts has only begun to pull it lower. Bulls point to the Modern Animal acquisition, autoship model durability, and a forward EPS trajectory that ranks in the 87th percentile year-on-year. Bears emphasise supply chain concentration in Asia, narrowing competitive advantages in delivery speed, and a P/E of 12x that — while not expensive — prices in execution the company still has to deliver.
The last earnings reaction, on May 27, was essentially flat on the day: a 0.6% gain. The print before that, in March, produced a 15% jump in a single session. The range of outcomes on earnings day has been wide — the setup heading into June 10 is meaningfully different from May, with short interest higher, options more defensive, and analysts having already dialled back expectations.
What to watch on June 10: whether the actual revenue and autoship cohort data justify a multiple that the Street is actively de-rating, and whether the short base — now 40% larger than six weeks ago — responds to the print by covering or adding.
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