"Retail investors' leader" has a new target? Petco and Pet concept stock Chewy surged

On Thursday, the stock price of online pet food retailer Chewy surged more than 34% intraday, marking the largest intraday gain since June 2019 and hitting a new intraday high since July last year.The unusual movement in Chewy's stock price was triggered by "retail investor leader" Keith Gill, who posted an image of a cartoon dog on the social media platform X, which bore a striking resemblance to Chewy's logo. Gill, known as DeepF-Value on Reddit and Roaring Kitty on YouTube and X.Petco Health & Wellness Co Inc. (WOOF) also saw a surge of over 12%, while GameStop (GME) rose more than 10%.However, Chewy's spike was short-lived, as by the end of Thursday's trading session, the stock had given back all its intraday gains, closing slightly down by 0.31%. Petco also retraced all its gains, closing up by 0.3%. GME's gains significantly narrowed, closing up by 3.7%.It is worth noting that there is a close connection between the "retail investor leader's" notable work GME and Chewy. GME's CEO Ryan Cohen is the founder and former CEO of Chewy, having facilitated PetSmart's acquisition of Chewy in 2017 and its subsequent IPO in 2019.In January 2021, Cohen, along with two other Chewy executives, joined GME's board, which to some extent fueled the initial rise in GME's stock price. Cohen took over as GME's CEO in 2023, leading the transformation of this brick-and-mortar video game retailer.During the COVID-19 pandemic, consumers staying at home adopted a large number of cats and dogs, leading to significant increases in the stock prices of pet retailers like Chewy and Petco. After adopting pets, people purchased necessary accessories for their new family members, such as new beds and leashes.However, as the pandemic comes to an end and people start going out again, the rate of pet adoptions has slowed down, resulting in reduced demand for toys and cages, which are higher-margin products for pet retailers compared to pet food. Over the past year or so, while Chewy and Petco's pet food sales have remained strong, revenue from high-margin categories has declined.Steve Sosnick, Chief Strategist at Interactive Brokers LLC, believes that "conventional news" would not cause such significant stock price fluctuations, but rather, "a picture of a dog" drove the stock price up