Can Chewy's Earnings Beat Fuel GameStop Stock?

Chewy Inc CHWY released its fourth-quarter results on Tuesday which sent the company’s stock soaring nearly 10.5% in the after-hours session, building a possible scenario that the exuberance can extend to GameStop Corporation GME.

What Happened: Ryan Cohen-co-founded Chewy reported adjusted earnings per share of 5 cents, which is higher than the 9 cents per share expected loss.

The online pet food retailer posted a $2.04 billion revenue in Q4 as against the expected 1.96 billion. Chewy revenue grew 51% over a comparable period year over year. 

Cohen, who owns a 13% stake in GameStop through RC Ventures, has emerged as a potential game-changer for the video game retailer.

This has not gone unnoticed by the Reddit retail investor crowd, which took part in a short squeeze in GameStop shares.

Screenshots of posts on Reddit forum r/WallStreetBets

Why It Matters: Last week, GameStop informed the U.S. Securities and Exchange Commission that eight of its board members are set to depart the company.

The executive exodus comes after the company announced the constitution of a strategic planning and capital allocation committee this month, which will be led by Cohen and include former Chewy executive Kurt Wolf.

Rod Alzmann told Benzinga’s Luke Jacboi earlier in the month while referring to the committee that “Chewy-fication [of GameStop] keeps happening.”

CNBC “Mad Money” host Jim Cramer said last week that GameStop remains overvalued.

“If you buy the stock here, you’re betting that Ryan Cohen’s plan will be wildly successful, which seems like a stretch given that we don’t even know what the plan is yet,” Cramer said.

Price Action: Chewy shares soared 10.48% in the after-hours session on Tuesday to $88.80 after closing 1.94% higher at $80.38. On the same day, GameStop shares closed nearly 7.3% higher in the regular session at $194.46 and gained 0.64% in the after-hours trading.

See also: How‌ ‌to‌ ‌Buy‌ ‌GameStop‌ ‌(GME)‌ ‌Stock‌

Photo courtesy: EPIC via Wikimedia