Over the past five years, Chewy’s stock has fallen by nearly 70% even as the company turned profitable and improved key metrics. In Q3 2025, net sales reached $3.12 billion, an 8.3% year-over-year increase, and both gross margin (29.8%) and net margin (1.9%) moved into positive territory for the first time since its IPO. Despite this progress, investor sentiment has remained muted, reflecting concerns over valuation in a highly competitive online retail environment.

Chewy’s subscription-style Autoship program accounted for 84% of net sales in Q3 2025, up from 83.9% in the prior quarter, underscoring its role in reducing customer churn and generating recurring revenue. With over 15 million active Autoship customers and an overall active customer base growing 4.9% year-over-year, this mechanism provides clear visibility into cash flows and serves as a buffer against broader economic slowdown in discretionary pet spending.

To diversify beyond core e-commerce pet supplies, Chewy is investing in pet insurance, veterinary telehealth and prescriptions, leveraging its existing customer relationships to cross-sell higher-margin services. However, the U.S. pet market—currently valued at $152 billion and expected to grow at a 6% CAGR to $192 billion by 2028—remains fiercely contested. Amazon controls nearly half of online pet sales, while Walmart holds about one-third, leaving Chewy’s 41% share under constant pressure. Management has signaled plans for international expansion and further product innovation to defend and grow its position against mega-retailers.