DUBLIN, Ohio (WCMH) — Stock for Dublin, Ohio-based Wendy’s reached an all-time high Tuesday morning, the apparent target of meme stock traders.
As of 11:30 a.m. Tuesday, Wendy’s is trading at $26.53 per share(+15.65%), and has been as high as $27.40.
YOLO Stocks, which tracks mentions of companies on Reddit, shows Wendy’s as the 6th most talked about company in the last 24 hours as of 11:30 a.m., up from 17th previously.
CNBC Mad Money host Jim Cramer tweeted that he thinks the stock deserves to be higher.
In May, Wendy’s reported first quarter earnings that beat analyst expectations with revenues of $460.2 million compared to $405 million one year ago.
A Wendy’s spokesperson said in a statement:
We’re aware of the unusual trading activity today and we’re closely monitoring.Wendy’s spokesperson
Earlier this year, Gamestop was the poster child for the meme stock phenomenon. The struggling video-game retailer suddenly surged 1,625% in January. Back then, the maniacal moves for meme stocks shocked Wall Street, but many professional investors expected the fervor to peter out eventually.
Everyone agreed that a new generation of investors was seizing more power in the market, with their ranks growing because of easy-to-use trading apps and zero trading fees. But one big reason for the incoming wave of novices was that the pandemic had left them with little else to do.
When the pandemic eased, the thinking on Wall Street went, those traders would go back to eating out at restaurants, heading to bars and maybe even seeing movies at the theater instead of talking up and bidding up meme stocks.
It didn’t play out that way, at least not yet. Meme stocks did lose momentum following their January supernova, but they began soaring again recently. GameStop is hovering near $300 after dropping from a peak of $347 in late January to $40 a few weeks later.
For their part, many retail investors said on the social media forums that have spurred the meme stocks’ moves that they’ll remain steadfast.
“We can stay irrational longer than they can stay solvent” was the title of one thread on Reddit’s WallStreetBets forum, which has been a central character in the rise of meme stocks.
The huge moves for meme stocks have caused some critics to warn of a dangerous bubble, with investors taking excessive risks across financial markets after the Federal Reserve slashed interest rates to record lows.
One encouraging part of all this, though, is that the most worrisome behavior seems to be rolling through different investments rather than inflating the entire market, said Yung-Yu Ma, chief investment strategist for BMO Wealth Management.
He pointed to what are known as “blank-check companies,” which raise money and then hunt for companies to buy. Interest was exploding in these special-purpose acquisition companies early this year, but it’s fallen off recently. He pointed to a similar rise and fall for some of the more obscure cryptocurrencies.
“I wouldn’t say it’s healthy for the market, but it’s somewhat contained,” Ma said.
He thinks interest in meme stocks will likewise peter out.
“What happens is you get successive groups of investors that get burned with these things” after seductive runs higher in price yield to sharp drops, he said. “Some people make money, but the ones late to the party get burned, and that’s a recipe for fizzling out eventually.”
The Associated Press contributed to this report.