Wendy’s stock soars as meme traders target another turnaround play

Wendy’s shares surged on Wednesday, fueled by a burst of retail investor enthusiasm that appears disconnected from the fast-food chain’s latest executive appointment.

The stock climbed more than 42% on heavy volume at one point after Wendy’s disclosed the appointment of former Potbelly executive Steven Cirulis as chief financial officer and chief strategy officer. While management changes can influence investor sentiment, the magnitude of the move suggests other forces may be at play.

Trading was briefly halted by the New York Stock Exchange for volatility shortly after the open. When it resumed, it shot to a high of $8.89 a share. The stock was last up 30%.

Retail traders have increasingly turned their attention to the burger chain after the stock lost roughly half its value over the past 12 months. Wendy’s ranked as the second-most mentioned stock across Reddit trading forums over the past 24 hours, according to data tracked by Swaggy Stocks.

Posts circulating on social media have framed Wendy’s as a turnaround and recovery play. On WallStreetBets, one post titled “We need to save Wendy’s” garnered significant engagement. “We need to save Wendy’s before it’s too late,” the user wrote. Other posts framed the fast-food chain as a beaten-down consumer brand that retail investors could rally behind.

The surge in online attention echoes previous meme-stock episodes like GameStop where retail traders piled into beaten-down companies with elevated bearish bets against them.

That dynamic could be particularly relevant for Wendy’s. Roughly 23% of the company’s free float is currently sold short, according to S3 Partners, leaving the stock vulnerable to a squeeze if rising prices force bearish investors to cover positions.

Wendy’s didn’t immediately respond to CNBC’s request for comment.

— CNBC’s Nick Wells contributed reporting.