Wendy’s turns lower as meme rally fails to extend to a second day

Wendy’s shares failed to extend their rally for a second day on Thursday after the fast-food chain became the latest target of retail traders.

The company’s stock fell nearly 7% after surging by double digits earlier in the day. The stock saw a 25.7% gain in the previous session, their biggest advance since June 2021. The initial rally appeared largely disconnected from company fundamentals and instead reflected a burst of social media enthusiasm that has transformed Wendy’s into the latest meme stock favorite.

“Reddit crowd hijacks stock,” Don Bilson, head of event-driven research at Gordon Haskett, wrote in a note.

“GameStop is inarguably the OG of meme stocks. It earned that distinction during Covid and credit for this is owed to the army of apes that get their marching orders from Reddit’s WallStreetBets thread,” Bilson said. “This army happens to be on the move again this morning outside of Columbus, Ohio. That is where Wendy’s makes its home and its stock.”

The rally shocked many Wednesday after Wendy’s announced the appointment of former Potbelly executive Steven Cirulis as chief financial officer and chief strategy officer.

Traders on Reddit forums increasingly portrayed Wendy’s as a company worth “saving” after years of stock market underperformance. One widely shared WallStreetBets post is titled “We need to save Wendy’s” and urged fellow traders to rally behind the restaurant chain.

Vanda Research flagged Wendy’s as the most extreme case of abnormal retail buying on Thursday, with net purchases running more than seven times recent norms after a viral “Save Wendy’s” campaign swept through Reddit trading communities.

One Reddit user posted a screenshot showing a roughly $350,000 position in Wendy’s stock under the headline “$WEN to the moon – 350K YOLO,” drawing hundreds of comments and upvotes from fellow traders. Another post featured a meme image encouraging investors to “pump those numbers up,” joking that buying only one meal’s worth of Wendy’s stock amounted to “rookie numbers.”

— CNBC’s Nick Wells and Michael Bloom contributed reporting.