Pups Are Losing Their Luster: The Pandemic Pet Craze Slows and Puts Companies on the Hot Seat

Puppy eyes only work for so long.

While 13 million American households welcomed a new pet between March and December 2020 and U.S. pet industry sales grew 10% to top $100 billion for the first time in 2020, market data is starting to suggest the dog days of the pandemic pet craze may be over. And pet companies could soon find themselves on a much shorter leash as a result.

Taking a Bite Out of Margins

Less than two-thirds of the way through the year, VC-backed pet companies have already raised over $1.1 billion in 2021, the most of any year in history. But the pandemic-era boom in pet services hasn’t necessarily translated to better margins in the industry, and figures suggest the pet craze may be on its last legs:

• In June, New York City Animal Care Centers saw 1,393 animals brought in, more than double the number in February. The Humane Society of Dallas County’s intake is now twice as high as before the pandemic.
• While shares for pet insurance provider Trupanion have climbed 250% since the pandemic started and revenue rose to $168 million in the second quarter from $92 million in the same period in 2019, the company was actually $9 million in the red as insurance invoices beat out revenue growth.

Dog Bites Financial Plan: Cuddly as their merchandise may be, investors haven’t always found a soft landing with pet companies. The poster child of the dot-com bubble was arguably Pets.com, which was liquidated after imploding in 2000. More recently, SoftBank took a major loss on a writedown of its $300 million investment in struggling dog-walking app Wag in 2019.