Heavily Shorted Wendy's Soars After New CFO, Reddit Traders Pile In To Save Burger Chain

Heavily shorted Wendy's shares jumped as much as 22% in premarket trading on Wednesday, as a management shakeup and a surge of WallStreetBets activity around the struggling fast-food chain appeared to trigger a retail-driven squeeze.

The stock surge followed Wendy's appointment of former Potbelly CFO Steve Cirulis as CFO and chief strategy officer, as part of new CEO Robert Wright's turnaround effort for the fast-food chain, after shares had sunk 25% as of Tuesday's close.

Before joining Wendy's, Cirulis served as CFO and CSO for Potbelly Sandwich Works, departing from that role in December. He brings more than 30 years of experience across the retail and restaurant industries as the fast-food chain attempts to engineer a turnaround plan called "Project Fresh."

Outlet CFO Dive noted:

While at Potbelly — where he served overlapping tenures with Wendy's CEO Wright — he helped to lead a turnaround at the sandwich chain that boosted annual sales, CFO Dive sister publication Restaurant Dive reported at the time. Under Wright and Cirulis' leadership, Potbelly also saw a 500% jump in share price and improved its restaurant margin expansion and invested capital returns, Wendy's said Tuesday.

The Wright-Cirulis tag-team leadership shakeup at Wendy's appears to have sparked a retail-driven short squeeze, as short interest in the stock recently topped 31.8%, with about 4.7 days to cover.

This spark was likely fueled by Reddit-driven momentum piling into the beaten-down fast-food chain.

Activity on WallStreetBets:

Next GameStop? If so, risks mount whether the WEN CEO uses retail as a piggy bank through share sales.