Chewy Inc., the online pet care and e-commerce heavyweight, is once again at the center of investor debate after its largest shareholder, BC Partners (via affiliate Argos Holdings), offloaded $1.25 billion worth of stock on June 25, 2025. Nearly 30 million Class B shares were converted and sold as Class A shares at $41.75 each—a move that shook the market but left BC Partners with nearly 90% of Chewy’s voting power.
This reshuffling of Chewy’s ownership structure has put the spotlight on a familiar dilemma: Can a high-growth subscription model justify a sky-high valuation, or is institutional fatigue finally setting in?
Market Reaction: Short-Term Dip, Long-Term Questions
The immediate consequence of the sale was a modest 1.88% dip in Chewy’s stock price, with public float expanding by 6%. However, this was counterbalanced by a $100 million share buyback executed concurrently—part of a larger $500 million repurchase program already in place.
Management’s willingness to repurchase shares suggests confidence in the company’s underlying fundamentals, but the real question is whether such optimism is still warranted given Chewy’s valuation metrics.
The Financial Snapshot: Growth with Stretch Valuation
Chewy’s latest quarterly results offer a mix of solid operational momentum and eyebrow-raising multiples. First-quarter 2025 net sales stood at $3.12 billion, up 8.3% year-on-year, driven largely by the Autoship subscription model. Autoship now represents 82% of all sales—$2.56 billion in recurring revenue, up nearly 15% from the previous year.
Profitability metrics have improved. Net income soared to $392.7 million, an almost ninefold increase, while adjusted EBITDA margins rose to 6.2%. The company holds a net cash position, with net debt at -$93 million.
But the enterprise value tells a more complex story: Chewy trades at an EV/EBITDA multiple of 62.13x and a price-to-sales ratio of 1.41x—numbers far above industry norms.
Strategic Dynamics: Growth vs. Ownership
While BC Partners reduced its economic stake by 13%, its retention of control hints at a longer-term strategic play rather than a full exit. Institutional investors often rebalance when multiples expand too far, but retail investors may now find a more accessible entry point.
What makes Chewy particularly compelling is its move beyond e-commerce into service-led verticals. Its rollout of vetcare clinics (currently at 11 locations with aggressive expansion plans) and its new Chewy Plus membership signal an intent to own the full pet care ecosystem.
However, that transition is capital-intensive, and success will depend on whether high-margin services can scale quickly enough to counterbalance low-margin categories like pet food.
The Investment Lens: High Risk, High Belief
Chewy’s vision is ambitious—position itself not merely as a retailer but as the Amazon of pet care. The current valuation implies investors are already pricing in years of continued growth, strong margins, and near-flawless execution.
For long-term investors who believe in Chewy’s ability to build a vertically integrated pet care platform, the recent stock dip could represent a strategic entry point. The ongoing buyback also signals insider confidence in long-term value.
But for short-term traders, the signals are mixed. A larger float brings volatility, and the institutional exit—partial though it may be—hints at some divergence in market sentiment.
365247 Strategic Takeaway
Chewy represents the tension at the heart of modern digital growth models: sticky customer bases, recurring revenue, and high engagement are powerful. But they must be matched with scalable profit drivers and long-term margin expansion. The company’s next phase—moving from pure-play e-commerce to a blended service-retail model—will be its true test.
Investors and analysts alike must now decide: is Chewy still a disruptive force in pet commerce, or is it running out of leash?
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IMAGE: Chewy Inc.
