Ok, I see. I understand now. Thanks, was questioning myself a bit there.
So what is the opposite of a short squeeze? I guess when the process of actually shorting the stock, it doesn’t push the price down.
The difference between $CHWY and Pets.com is....
- Thread starter Pekelo
- Start date
So what is the opposite of a short squeeze? I guess when the process of actually shorting the stock, it doesn’t push the price down.
A bull squeeze, aka crash.
Spot on. Been having a similar version of this conversation lately with people.
I quote :
When central banks hold the cost of capital at zero, or at levels inconsistent with market forces, this induces mal-investment in the system. And the longer this environment persists the further this mal-investment is promoted.
I think most people understand that but what this translates into is severe deterioration in productivity growth. After all, how can you build a profitable business when you are forced to compete with unprofitable competitors who are supported by mal-investment?
So you get this stagnant economy as a result, and because the incentives are no longer market driven but policy driven, the return on capital naturally diminishes. This is quite dangerous and leads to the political upheaval I’ve been talking about and the breakdown in social contracts and much of the problems I discussed in the breakdown in Europe.
ZIRP and Central Banks subsidized the destruction of the private sector
When central banks hold the cost of capital at zero, or at levels inconsistent with market forces, this induces mal-investment in the system. And the longer this environment persists the further this mal-investment is promoted.
I think most people understand that but what this translates into is severe deterioration in productivity growth. After all, how can you build a profitable business when you are forced to compete with unprofitable competitors who are supported by mal-investment?
So you get this stagnant economy as a result, and because the incentives are no longer market driven but policy driven, the return on capital naturally diminishes. This is quite dangerous and leads to the political upheaval I’ve been talking about and the breakdown in social contracts and much of the problems I discussed in the breakdown in Europe.
ZIRP and Central Banks subsidized the destruction of the private sector
A comment on SA:
˝ If I were to ship two big bags of dog food with UPS for next day delivery, it would cost me over $100. And Chewy offers it "for free". We already know Chewy is losing money on the deal. But it not plausible that UPS is providing this service at break-even or better. If they were, then Chewy would be losing much more money.
UPS is scared to death of how quickly Amazon is building out its own transportation system that DOES NOT INCLUDE UPS or Fedex in the long run. And that "long run" may be only a couple of years away. UPS is doing some things that seem insane as a result. They are in panic and willing to do just about anything to tie up deals with anybody not names Amazon.
And this means that they are jacking up the rates on the individual that has no leverage. It is the individual and small business that really gets screwed in this Clash of the Titans.
Don't get me wrong. I like Chewy. Ignoring the artificial pricing, they provide good service, but it is a commodity so I won't use it much once the market forces them to stop losing money. I don't see them heading for any real economy of scale or critical mass that would make this business model work. I think it is easy to make a fundamental error, assuming that "brick and mortar" is always more expensive than Internet distribution. It is actually pretty efficient to ship semi-loads of dog and cat food to retail shops that generally have pretty low overhead. And also, don't ignore the social aspect of pet stores. Lots of people enjoy hanging out there and putting their pets on parade. This is a business where many of the customers are happy to go to the store to puck up the commodities, and that is 10x more cost effective than hiring a company to drive it to every single customer's door.˝
https://seekingalpha.com/article/4292988-chewy-fine-even-sentiment
˝ If I were to ship two big bags of dog food with UPS for next day delivery, it would cost me over $100. And Chewy offers it "for free". We already know Chewy is losing money on the deal. But it not plausible that UPS is providing this service at break-even or better. If they were, then Chewy would be losing much more money.
UPS is scared to death of how quickly Amazon is building out its own transportation system that DOES NOT INCLUDE UPS or Fedex in the long run. And that "long run" may be only a couple of years away. UPS is doing some things that seem insane as a result. They are in panic and willing to do just about anything to tie up deals with anybody not names Amazon.
And this means that they are jacking up the rates on the individual that has no leverage. It is the individual and small business that really gets screwed in this Clash of the Titans.
Don't get me wrong. I like Chewy. Ignoring the artificial pricing, they provide good service, but it is a commodity so I won't use it much once the market forces them to stop losing money. I don't see them heading for any real economy of scale or critical mass that would make this business model work. I think it is easy to make a fundamental error, assuming that "brick and mortar" is always more expensive than Internet distribution. It is actually pretty efficient to ship semi-loads of dog and cat food to retail shops that generally have pretty low overhead. And also, don't ignore the social aspect of pet stores. Lots of people enjoy hanging out there and putting their pets on parade. This is a business where many of the customers are happy to go to the store to puck up the commodities, and that is 10x more cost effective than hiring a company to drive it to every single customer's door.˝
https://seekingalpha.com/article/4292988-chewy-fine-even-sentiment
Your response is something to chew on.
Good topic! I used to buy products for my dog only at the local stores. When the prices increased, I decided to trying ordering online. It took me some time to find a good source, but finally I chose Pet Express. I should say, I'm pleased with it. But I haven't tried Chewy, thanks for enligtening!