The meme-stock crowd is rallying behind another beaten up American icon — Wendy’s Co. , the fast-food chain known for the Frosty, Dave’s Triple burger and the Biggie Deal.

The company’s shares, which had been on a steady downward slide for the past three years, surged as much as 42 per cent on Wednesday, triggering a volatility halt. It was the biggest jump since March 2020, when it joined other stocks in rebounding from the crash caused by the pandemic.

There was no news announcement behind the jump. But the stock climbed the ranks in Stocktwits, sitting at the top of its trending page. The reason appears to be a post on Reddit Inc.’s widely-followed WallStreetBets — which was later removed — that implored its members to “save Wendy’s before it’s too late.”

The burger chain fits the profile of those that day traders like to rally around now and again. Its stock had tumbled over 70 per cent since mid-2023. Short sellers have piled in, dumping borrowed stock, making it vulnerable to a price spike if others hoard shares when they need to close out their bearish bets. And it has solid nostalgia appeal, best known to Gen-Xers for its “Where’s the Beef?” television ads in the 1980s.

“This is definitely another iteration of meme stock mania,” said Jim Salera, an analyst at Stephens. “Wendy’s is a classic American brand that many of the retail traders likely have fond memories of, similar to the nostalgia that was tied to GameStop.”

The WallStreetBets page of Reddit has sparked bouts of meme stocks mania in recent years as day traders regularly look for the next target. Last year, Doughnut maker Krispy Kreme Inc. and tech-powered home flipper Opendoor Technologies saw their stocks surge as retail investors piled in.

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Wendy’s is also in the middle of a turnaround it seeks to improve sales. On Tuesday, Wendy’s appointed Steve Cirulis as its new chief financial officer, replacing Ken Cook, who will remain in an advisory position through July.

Bloomberg.com