PETS

PetMed Express ($PETS): Major Shareholders Buy the 22% Dip as Activist SilverCape Pushes for Management Changes

07/21/2025 12:16

PetMed Express ($PETS) is sending mixed signals to investors. While the stock has declined 22% over the past year, major shareholders are aggressively buying shares, creating an intriguing investment dynamic. PetMed Express is an online specialty retailer of pet medications and health supplements. Founded in 1996, the company has built a business model selling over-the-counter pet medications and supplements through online and phone channels. As a small-cap company with a market capitalization of $67.1 million, it faces intense competition from large online retailers like Amazon. The most notable development is the contrasting behavior between falling stock prices and major shareholder buying. NINA CAPITAL HOLDINGS has purchased a total of 464,500 shares from September 2024 through June 2025, investing approximately $2 million. More interesting is SilverCape Investments' activity. They began actively buying shares in May 2025, accumulating an 11.1% stake, and filed an SEC disclosure on May 20 indicating potential discussions with management and possible director nominations. This represents typical activist investor behavior. SilverCape appears intent on enhancing corporate value through management changes or strategic shifts, based on their assessment that the current stock price is undervalued relative to intrinsic worth. The company's recent performance has indeed been challenging. Latest quarterly revenue declined 18.9% year-over-year to $52.98 million, with a loss of 3 cents per share. However, this was better than market expectations. Increased competition in the online pet medication market and changing consumer spending patterns have impacted performance. The stock currently trades at $3.31, down approximately 30% year-to-date. However, analyst price targets of $3.75 suggest 13% upside potential from current levels. Notably, major shareholders have been consistently buying at an average price in the $4 range, indicating investment attractiveness at current levels. Investors should closely monitor SilverCape's activist activities. If they successfully gain board representation and implement management changes or strategic shifts, this could positively impact the stock price. Conversely, prolonged conflicts with existing management or minimal business improvement could pose additional downside risks. In the near term, attention should focus on next quarter's earnings release and SilverCape's specific management intervention plans. Long-term success will depend on the growth of the online pet care market and the company's ability to restore competitiveness.