Chewy's Q2 growth needs to stabilize to regain investor confidence after a sharp valuation drop.

Chewy's profitability remains solid despite slowing sales growth, which has caused its stock to drop nearly 50% over the past year. The market is focused on whether active customer growth and net sales per active customer (NSPAC) can stabilize, signaling a bottom in growth. The company's valuation has fallen from about 24 times forward EBITDA to roughly 10.8 times today. While another $200 million guidance cut would be damaging, a steady Q2 performance might help restore investor confidence and lead to a valuation rebound.