Wendy’s Stock Is Soaring 20% Overnight — Retail Traders Are Begging for A Short Squeeze

Investors are betting the leadership change at Wendy’s could spark a turnaround and squeeze short sellers.

• Wendy’s named Steve Cirulis CFO and chief strategy officer, reigniting hopes for a turnaround. 
• Retail traders also piled into the stock as a potential short-squeeze play.
• Wendy’s shares had fallen nearly 40% over the past year and hit a 20-year low as weaker consumer spending hurt sales. 

Shares of The Wendy’s Company surged more than 20% in overnight trading after a combination of executive leadership changes and intense retail investor activity thrust the restaurant chain into the spotlight. If the gains hold through Wednesday’s session, the stock would be on track for its strongest single-day advance in more than five years.

Why WEN Investors Are Paying Attention

Investor enthusiasm picked up after Wendy’s named two former Potbelly Sandwich executives as its new chief financial officer and chief executive officer, as the beleaguered fast-food chain attempts a hard turnaround. The news quickly became a focal point for traders seeking signs of a broader recovery story. 

At the same time, online trading communities identified Wendy’s as a potential short-squeeze candidate. The stock climbed to the top of the trending list on Stocktwits and became one of the most talked-about names on Reddit’s WallStreetBets forum. 

Traders highlighted the company’s profitability, relatively low valuation and sizable dividend yield as reasons the stock differs from some speculative meme-stock names that dominated headlines during the 2021 trading frenzy.

Some even argued that a large bearish position in the stock created conditions that could force short sellers to repurchase shares if prices continued rising. Short interest in the stock is at a record level of 26.4%, according to Koyfin data.

Such positioning can amplify gains when investors betting against a company rush to close their trades. The stock’s move higher appeared to trigger exactly that dynamic, with buying activity intensifying ahead of Wednesday’s session. 

WEN’s Difficult Backdrop

The sudden optimism follows a challenging period for the restaurant operator. Wendy’s stock lost nearly 40% over the past year and touched a twenty-year low on Tuesday as consumers cut discretionary spending amid high inflation and fast-food chains competed aggressively on pricing. 

Wendy’s reported a 5.5% drop in global sales during the first quarter, largely because sales at its existing U.S. restaurants weakened. Profit margins were also squeezed by lower customer traffic and higher food expenses. U.S. same-store sales fell 7.8% in the quarter, worsening from a 2.8% decline a year earlier. 

What Are WEN Retail Traders Saying 

On Stocktwits, retail sentiment for WEN remained ‘extremely bullish’. The stock saw a 1,348% jump in message volume over the past seven days, with a 4.3% rise in watchers. 

A user said, “Wendy's Shorts are screwed, two billionaire activist own wendys and could start a bidding war, 110% of the float is locked up. Mini $GME short squeeze as it also has record short % Now WallstreetBets is involved.”

Another user said, “$WEN 1.18 B dollar market cap. PE of just 8 ... If we took Wendy's to 50 dollars a share the market cap would still only be around 10 billion dollars. PE of around 60 ... Kinda high, but with an all out squeeze.. who is to say it can't happen. We've seen much crazier scenarios . With short interest at 30 % ... We are tired of the bear raids . Close your short positions or get wiped out.”

A third user said, “Sell $TSLA and Buy $WEN as the Meme Trade has shifted overnight to Wendy's with rumors of Short Squeeze and Buyout to go Private.”

WEN stock has cratered 24% year-to-date. 

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