U.S. online pet food retailer Chewy surged nearly 29% intraday on Monday, as Keith Gil, known as the "head of retail" among U.S. individual investors, disclosed his 6.6% passive stake in the company.
According to a disclosure on the official website of the US Securities and Exchange Commission (SEC), Keith Gil owns about 9 million shares of Chewy's Class A stock, with a total value of about $245 million at last Friday's closing price. Chewy's stock has risen about 70% since early May, but still remains 79% lower than its peak in 2021.
Chewy's soaring share price took a hit and closed down 6% after an almost 29% intraday spike, the reason being retail investor Keith Gil's disclosure of its 6.6% passive stake in the online pet food retailer. Since early May, Chewy's stock has risen about 70%, but still remains 79% lower than its peak in 2021. Keith Gil posted a cartoon graphic featuring a dog on social media platform X last week, leading to a brief spike in stock prices of Chewy and Petco Health and Wellness (WOOF.US).
"This changes the rules of the game. Having a large enough position to prove the validity of a trade is very different from delivering a trading signal through mysterious emoji," says Steve Sosnick, chief strategist at Interactive Brokers.
There is also an increasing interest in short selling Chewy in the market. According to data from S3 Partners, the proportion of short positions in Chewy's outstanding shares has climbed to more than 17%.
Chewy's options trading has also been mixed. The implied volatility of call options is higher than that of put options, indicating that investors' bullish sentiment is persistent, especially regarding contracts expiring in the next few weeks. However, the total trading volume of put options is likely to reach the highest single-day level since December 2021, indicating a weakening market sentiment.