PetMed Express (PETS) short, mcap=$344m

PETS short pitch:
– Richly valued retailer of pet medications with accelerating profit decline led by an unproven CEO without a credible plan.
– Operates in an increasingly competitive market.
– Pandemic-juiced results are reversing due to a proliferation of new competition.
– Recent investments are expensive and desperate actions that are bound to fail.
– Newly appointed promotional CEO and CFO have zero experience in the pet healthcare industry and their actions have quickly pushed PETS into becoming a melting ice cube

PETS valuation:
– Trades at 25xLTM PS of $0.65 with contracting revenues and margins.
– Expected to deliver only $0.15 EPS in two years, leading to $7/share target at the same generous multiple.

Exp. gain: 65% to $7/share

Full write-up (free guest account required):