Why Petco (WOOF) Stock Is Nosediving

What Happened?

Shares of pet-focused retailer Petco (NASDAQ:WOOF) fell 24.1% in the afternoon session after the company reported weak first-quarter 2025 results, as both its revenue and EBITDA guidance for the next quarter missed Wall Street's estimates. The underwhelming sales outlook implied low-single-digit decline in second-quarter, signaling limited demand recovery. 

On the other hand, Petco exceeded analysts' EBITDA and EPS estimates. Still, this was a challenging quarter.

The shares closed the day at $2.78, down 24% from previous close.

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What The Market Is Telling Us

Petco’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. But moves this big are rare even for Petco and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 2 months ago when the stock gained 35.1% on the news that the company reported impressive fourth quarter 2024 results. Sales were in line with expectations, while EBITDA came in significantly ahead. Despite the sales decline recorded during the quarter, Petco held its ground on profitability as management provided upbeat guidance for the first quarter which pointed to low single-digit sales declines but an EBITDA margin improvement, which helped ease investor concerns. All told, this was a strong quarter on the profitability front, even if top-line growth remained sluggish.

Petco is down 31.5% since the beginning of the year, and at $2.81 per share, it is trading 51.3% below its 52-week high of $5.77 from October 2024. Investors who bought $1,000 worth of Petco’s shares at the IPO in January 2021 would now be looking at an investment worth $95.58.

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