Chewy (CHWY) will report results 5/31 after the close with the Street looking for ($0.04) EPS and $2.73B in Revenues (+12.4%) while Q2/FY24 seen at ($0.03) / $2.7B and ($0.06) /$11.28B. CHWY shares have closed lower on earnings ten of thirteen reports but higher two of the last four, a six-quarter average max move of 13.95%. Chewy is a pure play e-commerce company geared toward pet products for dogs, cats, fish, birds, small pets, horses, and reptiles. CHWY has a market cap of $13.9B and trades at extreme valuations of 38.5X EBITDA and 115X FCF but just 1.1X EV/Sales. CHWY forecasts see 11.7% revenue growth this year and 11.2% next year with 2024 seeing a big step-up in profits with 38% EBITDA growth forecasted. CHWY comes into this quarter with clear consumer weakness and ecommerce growth slowing but also should benefit from lower costs. CHWY announced it will enter its first international market in the coming quarters. International should drive accelerated revenue growth once launched, but the market likely sees this as the beginning of a multi-year investment cycle and a signal that it may have reached TAM limitations in the US . CHWY has an average analyst target of $45 with short interest high at 21% of the float. RayJay upgraded to Outperform on 5/3 with a $36 target expecting 2H23 positive inflection with improving trends and plenty of levers to driver better growth and margins. Argus started shares Hold in April seeing earnings pressure for weaker online ordering and substantial investments. JMP started at Outperform with a $50 target positive on premiumization of pets and the auto-ship subscription model adds more predictability into future revenue than typically seen in an e-commerce marketplace. CHWY technicals have seen relative weakness and trading near multi-month lows with lower value at $24.75 a potential target after a recent failed move to $33 VPOC. CHWY options are pricing in a 9.6% earnings move and 30-day IV Skew at +1.4 compares to the +3.8 52-week average. CHWY put/call open interest is at the 8^th percentile and average IV30 crush is -22.5%. CHWY has seen some accumulation of put buys at July and January $32.50 strikes while October $22.50 puts recently sold to open but 2500 Oct. $30 puts bought.

Trade to Consider: Long the CHWY July $30/$25 Put Spreads for $1.70