Chewy shares experienced a significant rally on Thursday, all thanks to the meme stock leader, Roaring Kitty, also known as Keith Gill. Gill posted an image on a social media platform resembling the logo of the online pet food retailer, causing a surge in Chewy’s stock price. However, the gains were short-lived as the shares quickly declined later in the trading session.
Roaring Kitty has gained popularity by stirring up trading in speculative names like GameStop through cryptic images and memes posted online. Interestingly, there is a strong link between Chewy and GameStop. GameStop’s CEO, Ryan Cohen, was the founder and CEO of Chewy before being involved in PetSmart’s acquisition of Chewy in 2017 and its subsequent IPO in 2019. This connection has fueled the trading activity in both stocks.
The Pandemic Effect
During the pandemic, pet retailers such as Chewy and Petco experienced a surge in customer demand as people adopted pets while staying at home. This led to an increase in sales of pet-related accessories such as beds and leashes. However, as the pandemic restrictions eased and people went back to their normal routines, the demand for discretionary pet items decreased, impacting the profits of retailers like Chewy.
Keith Gill, the man behind the meme stock frenzy, has a background in marketing for Massachusetts Mutual Life Insurance. He gained widespread attention for encouraging retail investors to buy GameStop shares and call options in 2021, causing a short squeeze on hedge funds. Gill’s activities in the market led to congressional hearings on brokers’ practices and the impact of retail trading gamification.
The rise and fall of Chewy shares are a testament to the influence of meme stock traders and the volatile nature of the market. While Roaring Kitty’s actions may have caused a temporary spike in Chewy’s stock price, the underlying factors affecting the company’s performance remain crucial in determining its long-term prospects. Investors should be wary of the speculative nature of meme stocks and conduct thorough research before making investment decisions.
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