They say an army travels on its stomach. In this case, it’s the Reddit army and they’re focused on Wendy’s (NASDAQ:WEN). Social media chatter about the fast-food chain’s summer menu and other delicacies have WEN stock up more than 20% in pre-market trading on Tuesday.
Seven weeks ago, the company came out of the pandemic swinging, with plans to add 250 restaurants globally by the end of 2021. That would give it 7,000 locations, including the chain’s first units in the United Kingdom. “We are on our way to drive toward 8,000 restaurants by 2025,” CEO Todd Penegor said.
And while there are fundamentals that could support cursory due diligence on the stock, it’s customers pining for “Chicken Tendies” and the operator’s Summer Strawberry Chicken Salad, along with some Twitter “beef” between GameStop (NYSE:GME) and Wendy’s that’s lighting up the r/WallStreetBets subreddit. Their Twitter profiles are actively following each other and going off each other’s posts.
Even Yahoo Finance editor Brian Sozzi is taking notice.
WEN Stock Fundamentals Support Some of Move
To be sure, for those looking for “where’s the beef” with WEN stock, there are several key metrics that a serious investor could sink their teeth into. The May 12 report topped expectations, with the first quarter’s reported net income rising to $41.4 million, or 18 cents a share, up from $14.4 million, or 6 cents a share, a year ago. On an adjusted basis, Wendy’s earned 20 cents per share, beating average analyst estimates of 15 cents a share. Same-store sales rose 13% from the year-ago quarter.
But, back to the menu, it’s the chicken sandwich that garnered the attention. “The strength of the Classic Chicken, along with the success of the Jalapeno Popper, has allowed us to compete very well in the chicken sandwich category. In fact, our share of breaded chicken sandwiches within QSR grew in the month of March, despite significant competitive activity,” Penegor said on the earnings call.
Heading into a reopened economy, Wendy’s expects sales of its breakfast items to grow, which gave management confidence in raising its forecast for the rest of the year, to a 10% increase for the year.
So, is WEN stock meme-worthy enough for the Reddit army? That depends on its other characteristics. There’s not a lot of stock available, comparatively, with about 220 million shares in free float and a short volume ratio of 6%.
Yet as one r/WSB poster noted, WEN is rapidly becoming the “Most memed company on the internet if it gains traction then, frenzy+scarcity+low volume means minimal buys could push the price quickly.”
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.