Insider Activity: Chewy Inc (CHWY)

Director makes million-dollar buy.

Director James Star of Chewy Inc (CHWY) bought 41,521 shares recently, increasing his stake by 83 percent. At a cost just under $24 per share, the buy came to $994,000.

This is the second insider buy at the company since it went public from PetSmart back in June. Since the IPO, no insiders have sold shares, and the insider who did sell shares at the IPO was a fund, not a member of the corporate staff or board.

  • Special: Legendary Stock-Picker Predicts Best-Performing Stock of 2020
  • Chewy shares went public this year at $35, traded as high as $41, but have since slid into the low $20 range, with shares starting to make an upward move in the past few days. The company is growing its revenue by over 43 percent per year, but is still a long way from profitability.

    Action to take: Chewy has been building up its business as a pure-play e-commerce business on pet related products, and still has ties to its founding company, PetSmart. We advised readers to avoid the IPO, and think investors should wait a few more months before buying, as corporate insiders typically have a “lock up” period for the first six months of trading where they’re not allowed to sell shares.

    Traders may want to take advantage of the selloff in shares by buying the April 2020 $30 calls, which have the time and upside to double or triple if shares continue to head higher from here.