Wendy’s stock climbed almost 30% on Wednesday after traders on Reddit’s WallStreetBets forum rallied behind the struggling burger chain, reviving the meme-stock playbook that powered GameStop in 2021.

The rally lifted Wendy’s shares (WEN) to an intraday high near $8.89 and triggered at least one volatility halt, even as sales keep sliding.

Why Wendy’s Stock Drew a Short Squeeze

The move started with a since-deleted WallStreetBets post that urged members to rescue the chain before it collapsed. Copycat posts showing share and options purchases quickly followed.

“Save Wendy’s before it’s too late,”

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Volume confirmed the frenzy. More than 202 million shares changed hands, over 15 times the recent average.

The stock logged its biggest single-day gain since March 2020, CNBC reported. Wendy’s had ended the prior session near $6.26, not far from a multiyear low.

The squeeze setup is real but far smaller than 2021. About 23% of Wendy’s float was sold short before the rally, according to S3 Partners. The same firm put GameStop’s short interest above 140% of its float ahead of the 2021 squeeze.

Rising prices can still force shorts to buy back stock, which pushes prices higher. That pattern drove the AMC and GameStop squeeze, and it resurfaced this year during the GameStop meme stock frenzy.

A CFO Hire Gives Bulls a Story

Sentiment had a fundamental hook too. Wendy’s named Steve Cirulis chief financial officer on June 23, succeeding Ken Cook, according to a regulatory filing.

Cirulis ran finance at Potbelly alongside Bob Wright, now Wendy’s CEO. The company credits the pair with a more than 500% gain in Potbelly’s share price during their tenure.

That record gave retail buyers a turnaround story to chase, a familiar driver of meme driven market moves. The hire builds on a recovery plan the company calls Project Fresh.

Fundamentals Still Point Down

The business behind the rally remains weak. US same-restaurant sales fell 7.8% in the first quarter, and net income slid to $22.7 million.

Quarterly earnings still beat reduced forecasts, yet the rally rests on sentiment rather than results.

Wendy’s has been here before. A June 2021 Reddit post hailed Wendy’s as the perfect WallStreetBets stock and briefly drove shares up 26%. That rally faded within weeks because almost none of the stock was sold short.

This time a crowded short base gives the move real fuel. Still, most names lifted by Reddit traders and markets eventually gave back their gains.

Wendy’s gains holding may depend on how long the crowd stays interested.

Source: BeInCrypto