Wendy’s Is Suddenly a Meme Stock

Shares of The Wendy’s Company (NASDAQ:WEN) were rocketing 18% higher today after the WallStreetBets subreddit crowd apparently turned its attention to the fast-food chain and mentioned it as a possible short squeeze candidate.

Chat room traders this year have driven up the shares of a number of companies that short-sellers have bet heavily against. While squeezes are not uncommon, retail investors have driven the discussion since January when they rallied together to support GameStop (NYSE:GME) and lash out at hedge funds that overplayed their hands.

Wendy’s, though, is an unlikely stock to serve as a rallying point for Reddit investors, as there were just 8.2 million shares sold short at last count, down almost 18% from the prior period and amounting to just 4% of the shares outstanding.

With days to cover standing at around 2.5, it doesn’t seem like a strong candidate to carry the banner next.

Woman ready to take big bite of a burger

Image source: Getty Images.

Wendy’s stock is actually up 43% from the 52-week low it hit in March, and last month beat analyst expectations for first-quarter results, posting revenue of $460 million and generating adjusted profits of $0.20 per share. 

That was notably better than the $444 million in revenue and $0.14 per share in earnings Wall Street anticipated.

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While the meme stocks of the trading frenzy that started 2021 continue to capture the Reddit crowd’s fancy, such as AMC Entertainment Holdings (NYSE:AMC), which has doubled in the past week alone, there have been a few other stocks that were curious choices, such as Tootsie Roll Industries (NYSE:TR), whose stock spiked over 100% in January and still trades 15% above where it started the year.

Wendy’s has several tailwinds, including a returning workforce and a bullish outlook by management that raised full-year guidance.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


View more information: https://www.fool.com/investing/2021/06/08/wendys-is-suddenly-a-meme-stock/

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