Wendy’s Shares Align With New Reddit Trading Strategy, Says Jim Cramer
CNBC’s Jim Cramer said on Tuesday that the crowd of Wall Street Bets investors were showing patience with analysts after the online investment group sparked an unsuspecting rally in Wendy’s actions.
“I want you to forget about the analysts right now. The person in charge of Wendy’s is Reddit user Chillznda,” Cramer said on “Crazy money.” “With that [user] and some others anonymous favorable messages, Wendy’s stock is exploding upwards. “
Cramer noted that the approval was a departure from the short presses that grabbed the headlines that shone the spotlight on the retail investor group, which grew during the coronavirus pandemic.
A short squeeze occurs when investors who bet that a stock price will go down are forced to cover their losses if the price goes up instead.
“Now they’re spreading their wings, even in an institutional favorite like Wendy’s with a really low short position,” Cramer said.
While Wendy’s and other memes games may be seen as overvalued by traditional valuation metrics, the market has to reckon with a new class of investors, Cramer said.
“These metrics are important because everyone uses them,” he said, like the earnings per share projections. “If enough people with enough money start valuing stocks in a different way, their new metrics matter too, even if you think they are nonsense.”
“Eventually, the stocks of memes will run out, but for now, I think they’re just getting started.”