COLUMBUS, OHIO — Wendy's shares rose as much as 42% on Wednesday during trading, following coordinated buying activity by Reddit traders and a viral post on the WallStreetBets forum. The shares were up approximately 24% in the afternoon and closed up about 27.5% for the day. This gain marked Wendy's biggest advance since June 2021. Wendy's shares climbed more than 16% in premarket trading on Wednesday and rose an additional 12% in premarket trading on Thursday.

A Reddit post titled "$WEN to the moon – 350K YOLO" featured a screenshot showing a roughly $350,000 position in Wendy's stock. Another post on the WallStreetBets forum had urged users to "save Wendy's before it's too late"; this specific post was later removed. According to Swaggy Stocks data, Wendy's ranked as the second-most mentioned stock across Reddit trading forums over a 24-hour period.

Don Bilson, head of event-driven research at Gordon Haskett, stated that the "Reddit crowd hijacks stock." He referenced GameStop as the "OG of meme stocks" and noted that credit for this is owed "to the army of apes that get their marching orders from Reddit's WallStreetBets thread." Bilson added, "This army happens to be on the move again this morning outside of Columbus, Ohio," where "That is where Wendy's makes its home and its stock."

S3 Partners data indicates that roughly 23% of Wendy's free float is currently sold short. Data from Bloomberg News also showed short interest in Wendy's shares at approximately 24% of the stock's public float. Before this rally, Wendy's stock had lost roughly half its value over the preceding 12 months, and its shares fell more than 70% since mid-2023. The surge on Wednesday marked Wendy's biggest jump since March 2020.

Scott Martin, a partner at Kingsview Wealth Management, commented that "The Wendy's rally has much more to do with trading activity than it does with the underlying business." He added, "Investors are focusing on momentum and short interest right now, not necessarily restaurant sales or earnings expectations." Martin also said, "There's a big difference between a stock moving because of improving fundamentals and a stock moving because traders are piling into the same theme at the same time." For the first quarter, Wendy's reported that US same-restaurant sales declined 7.8% and global same-restaurant sales fell 6.8%.

Why It Matters

The increase in Wendy's share price reflects a trend of coordinated retail trading activity impacting publicly traded companies, similar to previous events involving other stocks. The stock's high short interest percentage, a figure indicating the number of shares sold short, contributed to its susceptibility to rapid price increases driven by such coordinated efforts. This activity can lead to substantial volatility in a company's stock value, as seen with Wendy's shares experiencing their largest jump in years.

The engagement on platforms like Reddit's WallStreetBets demonstrates the influence of online communities on market dynamics. Analysts have drawn comparisons to past events where retail traders influenced stock prices, emphasizing that such movements can be driven by trading momentum rather than a company's fundamental business performance or financial results, such as the reported decline in same-restaurant sales for Wendy's.