Please ensure Javascript is enabled for purposes of website accessibility

Why PetMed Express Stock Is Sinking Today

By Keith Speights - Jun 3, 2021 at 11:42AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst's downgrade zapped some of Wednesday's momentum.

What happened

Shares of PetMed Express (PETS -3.87%) were sinking 22.8% as of 10:54 a.m. EDT on Thursday. The decline came after Sidoti analyst Anthony Lebiedzinski downgraded the stock to a neutral rating from his previous buy rating.

So what

Lebiedzinksi's downgrade of PetMed came following a big spike for the online pet pharmacy stock on Wednesday. Shares jumped more than 58%. This sizzling gain appeared to be related to traders in some online communities viewing PetMed Express as a good short squeeze candidate.

Dog with a person standing next to it and a veterinarian holding a notepad and pen.

Image source: Getty Images.

The best thing for long-term investors to do with all this volatility is focus on PetMed's business prospects more than the stock's fluctuations. However, after a boost from the COVID-19 pandemic, the company's growth prospects appear to be tapering off.

PetMed reported that net sales in its fiscal 2021 fourth quarter, which ended on March 31, 2021, slipped 3.5% year over year.  The problem was that online pharmacy business declined as veterinarian clinics and retail stores reopened for business. 

Now what

It's possible that a short-squeeze scenario could spark a dramatic rebound for PetMed shares. Even if that happens, though, it will only be temporary. The more important thing to watch is the company's efforts to build its customer base and add new services. PetMed Express CEO Menderes Akdag stated in the company's Q1 update that these initiatives will be top priorities in fiscal 2022.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PetMed Express, Inc. Stock Quote
PetMed Express, Inc.
$22.58 (-3.87%) $0.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.