What Happened?

Shares of e-commerce pet food and supplies retailer Chewy (NYSE:CHWY) fell 7.4% in the afternoon session after China imposed a 34% tariff on all U.S. imports amid escalating trade war tensions. This was partly in response to the "reciprocal tariffs" announced by the Trump administration the previous day, with levies on Chinese goods estimated to be as high as 50%. The move is the first in a list of anticipated retaliatory measures that could have had investors really worried. The tariffs were also widely seen as a significant threat to global trade flows, with the potential to slow economic growth and drive up consumer prices.

The shares closed the day at $31.53, down 6.3% from previous close.

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What The Market Is Telling Us

Chewy’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 7 months ago when the stock gained 17.9% on the news that the company reported second-quarter earnings results, with revenue, active customers, and EPS exceeding Wall Street's expectations. In addition, its EBITDA margin increased year on year, and free cash flow improved. Improved monetization also played a role in the results, as net sales per active customer clocked in at a record $565. Overall, this was an impressive quarter for the company.

Chewy is down 7.7% since the beginning of the year, and at $31.25 per share, it is trading 21.5% below its 52-week high of $39.80 from January 2025. Investors who bought $1,000 worth of Chewy’s shares 5 years ago would now be looking at an investment worth $940.70.

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