What happened

Shares of Chewy (NYSE:CHWY), the e-commerce pet products company, were among the winners last month, gaining 17%, according to data from S&P Global Market Intelligence. While there was no specific news out on Chewy, the stock benefited from a continuing recovery in the market, a brief rumor of Walmart taking a stake, and strong earnings reports from other e-commerce companies at the end of the month.

As you can see from the chart below, the gains in Chewy stock came from two separate spikes.

^SPX Chart

^SPX data by YCharts

So what

Chewy got off to a strong start in July as the June employment report was much better than expected, giving investors confidence that the recovery would be quicker than previously thought. On July 13, the stock briefly spiked on rumors mentioned in Seeking Alpha that Walmart could take a stake in the online pet products seller, though there didn't seem to be any official source and that rally faded quickly.

A labrador dog against an orange background

Image source: Chewy.

Finally, the stock rallied into August, climbing in the last few days of July, after online peers like Shopify and Amazon both delivered blowout earnings reports, signaling surging demand for e-commerce. The stock gained 13% over the last three days of the month, propelled by those reports.

Now what

Chewy shares have continued to increase into August as bullishness in the e-commerce sector remains strong, following stellar reports from Wayfair and Etsy. Chewy won't deliver its next earnings report until September, as the company operates on different fiscal calendar from most retailers, but the recession-proof pet products seller looks poised for strong growth, given the spike in demand for e-commerce during the pandemic and increased attention on pets as other hobbies and activities are unavailable. 

Considering those tailwinds, the stock could continue gaining from here.


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