Wendy's shares soar as WallStreetBets crowd turn attention to fast-food chain
Shares of Wendy's (WEN) are on the rise on Tuesday after Reddit's WallStreetBets chat board mentioned the stock as a potential short squeeze target alongside Clover Health Investments (CLOV). Those were not the only stocks finding favor among Reddit retail investors on Tuesday morning, with Naked Brand Group (NAKD), Sundial Growers (SNDL) and Workhorse Group (WKHS) also moving higher.
MEME STOCKS: While an unlikely "meme stock," Wendy's has attracted the attention of Reddit's WallStreetBets trading community, who mentioned the stock as well as Clover Health as potential short squeeze targets. Short interest in Clover has been climbing this year to about 42% of the float with a short exposure of over $430M, according to Bloomberg, citing data from S3 Partners. Other meme stocks moving higher on Tuesday morning include Naked Brand Group, Sundial Growers, Workhorse Group, AMC (AMC) and GameStop (GME).
SALES ACCELERATION IN MAY: In a research note to investors on Tuesday, Northcoast analyst Jim Sanderson said that recent channel checks across major markets show that Wendy's is "gaining ground in the current quarter" as weekly sales accelerated in both April and May. The analyst argued that menu price hikes are helping to drive growth and offset wage increases to retain employees. Going forward, additional inflows of cash to families starting in July under the Child Tax Credit Program will strengthen demand further, even as menu prices rise, Sanderson added. Longer-term, he believes Wendy’s is well positioned to drive growth globally as fewer competitors offer a rich opportunity to gain market share profitably. The analyst reiterated a Buy rating on Wendy's with a $30 price target.
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