The recent rally in Chewy shares, triggered by a social media post from meme stock leader Roaring Kitty, has once again brought attention to the power of online influencers in the stock market. Keith Gill, commonly known as Roaring Kitty, has a history of stirring up trading activity in speculative stocks like GameStop by posting cryptic images and memes on platforms like X. In this case, a simple picture of a cartoon dog resembling the Chewy logo caused shares to surge by 34% to $39.10 before quickly plummeting back down during Thursday’s trading session.
It’s important to note the strong connection between GameStop and Chewy, beyond just Roaring Kitty’s involvement. GameStop CEO Ryan Cohen, who was previously the founder and CEO of Chewy, played a key role in PetSmart’s acquisition of Chewy in 2017 and its subsequent IPO in 2019. This background ties the two companies together and has influenced the trading activity surrounding both stocks. Cohen’s move to the GameStop board in 2021 and later appointment as CEO also fueled the initial GameStop rally, showing the impact that executive changes can have on market sentiment.
The surge in pet adoptions during the pandemic had a significant impact on retailers like Chewy and Petco, leading to spikes in sales of pet supplies and accessories. However, as the pandemic restrictions eased and people began returning to normal routines, the demand for discretionary pet items waned. This shift has affected the revenue of pet retailers, particularly in higher margin categories such as toys and accessories. While Chewy and Petco have maintained strong sales in pet food, the decline in other categories has put pressure on their overall financial performance.
Keith Gill’s rise to fame as a retail trader and influencer highlights the growing trend of individual investors participating in the stock market through social media platforms. His advocacy for GameStop shares in 2021 led to a frenzy that attracted widespread attention, including congressional hearings on the impact of retail traders on market dynamics. The “gamification” of trading and the influence of online communities in driving stock prices have raised questions about the long-term stability of the market and the role of social media in shaping investment trends.
The volatility in Chewy shares and the broader meme stock phenomenon underscore the changing landscape of the stock market. As social media influencers continue to wield influence over trading activity and retail investors become more active in the market, traditional investing norms are being challenged. The interplay between online communities, executive leadership changes, and market trends will likely continue to shape the future of stock trading in unpredictable ways.