Forget "Where's the beef?" When it comes to the Wendy's fast food chain, investors are asking "What's the meme?"

That's because Wendy's is at the heart of the latest meme stock frenzy, even drawing comparisons to the famed 2021 GameStop stock craze.

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The fast food stock rally began Tuesday, with a WallStreetBets Reddit post titled "We need to save Wendy's (1)" — the same day Stansberry Research noted the chain's stock hit a 13-year low following a five-year, 70% decline (2), not to mention the closure of hundreds of locations (3).

Spurred by a nostalgia-fuelled love of the brand — and the hiring of new CFO Steven Cirulis, formerly of Potbelly, who joins former Potbelly CEO Bob Wright in leading the company — retail traders jumped on the stock, boosting it by more than 25% on Wednesday (4).

The Wall Street Journal notes investors bought $15 million in Wendy's shares in one day Wednesday — essentially totaling the amount of the brand's stock purchased in the entire first half of this year (5).

The stock peaked at $9.31 a share early Thursday morning — a 34% increase over the last week (6). A few hours later, it dropped to $7.24.

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Marketbeat notes that nearly 32% of the brand's float was sold short as of the end of May (7), meaning short sellers could also be scrambling to shore up their losses (5).

The Wendy's frenzy, meanwhile, is unlikely to hit the level of the 2021 GameStop short squeeze, which saw the struggling video game retailer's stock skyrocket more than 1,500%, bringing both huge profits for some and catastrophic losses for others before trading was paused (8).

"The 2021 meme stock playbook looks to be re-emerging," Vanda Research wrote. "It's too early to call this a new meme-stock cycle, but the flow profile looks increasingly reminiscent of the 2021 WallStreetBets playbook (9)."

Vanda added that, "While not every retail-driven short squeeze is the same, the ingredients look familiar: elevated short interest, a beaten-up consumer name, strong social media engagement and a simple retail narrative around 'saving Wendy's.'"

Another industry analyst simply characterised the frenzy as "Reddit crowd hijacks stock (4)," which is still far from its 2021 peak of $22.78 (10).

But while the stock is likely to come back down to Earth, there is belief that the chain's future looks much brighter.

"Between its established appeal among younger consumers, its strength with older diners, and a breakfast business that still has room to improve, Wendy's has several levers it can pull to regain momentum," Shira Petrack, of the consumer data platform Placer.ai wrote (11).

As well, the duo of Wright and Cirulis helped boost Potbelly's fortunes significantly, including a share price increase of 500% and a boost in franchisees (12) before selling to convenience store chain owner RaceTrac for $566 million — a magic touch that Wendy's lovers hope will translate to the food chain (13).

All of which means that, even if the stock levels out as fast as it rose, there's a decent chance that fans of the brand — not to mention Wendy herself, in the logo with the red pigtails — will have plenty of reason to smile going forward.

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Reddit (1); Stansberryresearch (2); Ctvnews (3); Cnbc (4); Wsj (5); Robinhood (6); Marketbeat (7); Cnn (8); Bloomberg (9); Macrotrends (10); Finance Yahoo (11); Restaurantdive (12); Franchisetimes (13)

This article originally appeared on Moneywise.com under the title: 'We need to save Wendy's': How a perfect storm of conditions created the latest meme stock frenzy

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