Chewy shares briefly rise after filing shows 'Roaring Kitty' takes stake

FILE PHOTO: Logos for Chewy Inc. are displayed on the trading floor on the morning of the company's IPO at the New York Stock Exchange (NYSE) in New York City, U.S., June 14, 2019. REUTERS/Andrew Kelly/File Photo

By Manas Mishra

(Reuters) -Shares of Chewy fell on Monday after a brief surge driven by a filing that showed Keith Gill, the stock influencer known as "Roaring Kitty", had bought a 6.6% stake in the pet products e-retailer.

The filing with the U.S. Securities and Exchange Commission indicates Gill purchased the stake on June 24, three days before he posted an uncaptioned picture of a puppy on social media platform X that briefly sent Chewy shares to a near one-year high on Thursday.

FILE PHOTO: Keith Gill, an individual online investor in GameStop, testifies during a hearing of the U.S. House of Representatives Committee on Financial Services, in Washington, U.S., February 18, 2021. House Committee on Financial Services/Handout via Reuters/File Photo

The Monday filing, which lists Keith Gill as the reporting person, included a section "Check the appropriate box to designate whether you are a cat" under which the descriptor "I am not a cat" was checked.

The U.S. SEC, Chewy and Gill did not immediately respond to requests for comment.

Chewy's shares rose as high as $30 on Monday but reversed the gains in volatile trading. They were last down 6% at $25.64, with more than 43 million shares trading hands, nearly thrice the 25-day moving average volumes.

The filing showed Gill owns 9 million shares of Chewy, equating to a stake worth about $245 million at the stock's Friday closing price of $27.24. The stake would make Gill Chewy's third-largest shareholder, according to LSEG data.

Gill usually discloses his trading positions on platforms such as YouTube and Reddit, where he is known as "DeepFuckingValue", to the many retail traders who follow his cue.

Shares of Chewy, which sells pet food and medicine online, have risen 15% so far in 2024 but declined in the three preceding years as spending on pets slowed after a post-pandemic boom.

Trading volumes in Chewy stock options have been unusually high over the past 10 sessions, with some 158,000 contracts changing hands daily. That's nearly four times the average over the proceeding year, according to a Reuters analysis of Trade Alert data.

Call options, typically bought to express a bullish view, were particularly active. Contracts betting on Chewy finishing above $30 by mid-July were the most actively traded options on the stock over the last 10 days.

Chewy rival Petco Health and Wellness Company's shares fell 4%, after gaining more than 13% since Gill's post on Thursday.

Some analysts said last week Gill's interest in Chewy could also be influenced by the fact that the pet retailer was founded by GameStop CEO Ryan Cohen.

GameStop had gained nearly 700% in the 2021 meme-stock rally, fueled by Gill's posts. The influencer renewed a surge in GameStop shares in June, when he returned to Reddit after a two-year hiatus.

Shares of the videogame retailer have swung wildly since Gill reappeared. They dropped 6% on Monday, but have gained 33% for the year so far.

(Reporting by Manas Mishra and Pratik Jain in Bengaluru, Saqib Ahmed in New York; Editing by Saumyadeb Chakrabarty and Devika Syamnath)