Monday’s severe loss in pet retailer and services specialist Petco (WOOF) appears to be as clear of a warning sign as you can get. Slipping almost 11%, WOOF stock is now down over 9% in the trailing five sessions and more than 18% in the red during the trailing month. And even with the stunning turnaround that materialized in early May, Petco is up less than 7% year-to-date.
Nevertheless, it might be too early to call it quits on this intriguing meme trade. Sure, it’s never good when an equity loses 11% of value in a single day. And to be sure, several other meme stocks – including sector rival Chewy (CHWY) – suffered from volatile price action. However, it’s also true that the fundamentals of the U.S. pet industry are robust in terms of rising sales.
