Petco (WOOF, Financial) just sent a jolt through the market—and this time, it wasn't earnings that did it. Shares spiked nearly 20% at 11.26am today after CEO Joel Anderson disclosed a hefty insider buy: nearly 1.6 million shares, adding up to a $4.72 million bet on his own company. That move doubled his stake to roughly 3.2 million shares, and investors took notice. Petco stock hit a two-month high of $3.34, with the company now valued at around $1.1 billion.
The timing couldn't have been better. Just days earlier, Petco posted Q4 revenue of $1.6 billion—right in line with expectations. But guidance was less rosy: the company expects current quarter and full-year sales to dip in the low single digits. Normally, that wouldn't trigger a rally. But with short interest sitting at a sky-high 37% of the float as of mid-March, Anderson's show of confidence lit a fuse. A classic short squeeze may be in play here, and traders are piling in.
That said, Wall Street is still split. Out of 12 analysts covering the stock, only three rate it a buy. Most are sitting on the fence, with a median price target of $4. Even after this week's surge, WOOF is still down 7.2% year-to-date, similar to Nasdaq's 7% slide. But when the CEO bets big, and shorts are cornered, the setup gets interesting fast.
