The stock market looked ready to finish the week on a positive note, with major indexes posting modest gains. As of 1 p.m. ET, the Dow Jones Industrial Average (^DJI 0.62%) was up 71 points to 35,826. The S&P 500 (^GSPC 0.55%) rose 25 points to 4,692, while the Nasdaq Composite (^IXIC 0.63%) gained 50 points to 15,566.

Yet even amid a positive mood on Wall Street, a couple of stocks took significant hits. Pet supplies e-commerce specialist Chewy (CHWY 0.23%) took a sizable hit after releasing earnings results that didn't leave investors feeling as confident about the stock. However, the declines were much worse for another company that saw the departure of its founder. Below, we'll reveal the identity of that stock, but first, let's see what's happening with Chewy on Friday.

Dog under a house-shaped arch.

Image source: Getty Images.

Chewy rolls over

Shares of Chewy were down more than 9% Friday afternoon as investors weighed the ramifications of its third-quarter financial report. The online pet products retailer has done a great job of capturing the prevailing trend toward pet ownership during the COVID-19 pandemic, but investors now seem to have some concerns about the sustainability of Chewy's growth rates.

To be fair, the numbers from Chewy looked reasonably good. Sales climbed 24% to $2.21 billion for the quarter, bringing the total expansion in revenue since 2019 to 86%. Active customers climbed 15% year over year to 20.4 million, and sales per user grew at a similar 15% clip. Moreover, Chewy is seeing success with its efforts to get maximum value from its customers, especially with valuable features like its autoship service to ship regularly needed consumable products to customers automatically.

The unanswered question is whether favorable pet trends will reverse themselves in the near future. The pandemic forced hundreds of millions of people indoors, and that made pet ownership more attractive. It's certainly possible that returning to pre-pandemic activities will still be a positive for the pet trend, but Chewy shareholders seem at least a little nervous.

With today's drop, though, Chewy shares are down more than 50% from their February 2021 highs. That already seems to take a slowdown into account, and if new initiatives like its pet insurance partnership go well, it could help the stock bounce back quickly.

No bridge over troubled waters

The real drubbing on Wall Street happened to Everbridge (EVBG), whose stock dropped 47% Friday afternoon. The critical event management software specialist had an apparent emergency situation of its own arise, and investors aren't taking the uncertainty very well.

Late Thursday, Everbridge said that CEO David Meredith had notified the board of directors of his intent to resign from his current roles at the company. No further details were included in the press release regarding the reasons for Meredith's departure. To handle the transition, Everbridge created an "office of the CEO" under which CFO Patrick Brickley and Chief Revenue Officer Vernon Irvin will work together as co-CEOs for the interim. The board also started a search for a permanent CEO, with the intent to consider both internal and external candidates for the executive position.

Those following Everbridge weren't happy with the news. Several stock analysts reduced their ratings on the stock, suggesting that the loss of Meredith could expose weakness in business execution at a critical time for the company. Demand for Everbridge's services has been high during the pandemic, but it's unclear whether the company can make a smooth transition if less taxing conditions prevail in the future.

Throughout the market, growth companies are getting punished when things go wrong. That's a trend that's likely to continue into 2022 and beyond.