Wendy’s shares jumped 22% in premarket trading on Wednesday. Over 14 million shares were traded before the market opened, making Wendy’s one of the busiest stocks in the premarket. Now, the main question is whether this rally will continue beyond the first wave of retail buying.
There is a real chance for a short squeeze. Nearly 30% of Wendy’s public shares are sold short, which often draws in retail investors who try to force short sellers to buy back shares at higher prices.
Wendy’s has another reason for optimism. On Tuesday, the company named Steve Cirulis, who was CFO at Potbelly Sandwich Works, as its new chief financial officer and chief strategy officer. This is part of a larger turnaround plan led by the new CEO. Also, activist investor Nelson Peltz’s Trian Fund Management owns about 14.9 million shares, worth around $93 million as of Tuesday’s close, giving the recovery effort some institutional support.
Wendy’s stock has dropped 47% in the past year as consumers, feeling the effects of inflation, have spent less at restaurants. The stock now trades at about 11 times its expected 2026 earnings, which is considered cheap. However, analysts expect sales to grow less than 1% this year. This low price makes the stock look like a bargain, but it also means there is no strong short-term reason for the rally.
