AMC Entertainment and GameStop have been the main companies in the spotlight for the meme stock revolution that is currently unfolding in front of our eyes. But there have been quite a few other companies that have experienced similar rises in their stock prices thanks to Reddit, WallStreetBets, and the Ape revolution. The fast-food restaurant chain Wendy’s has become one of the latest companies to have the spotlight on it and experience a meteoric rise in their stock price.
BlackBerry, Workhorse, Sundial Growers (SNDL), and Bed Bath & Beyond were all meme stocks involved in the original short-squeeze events that happened at the end of January and beginning of February this year, 2021. GameStop led the way during this time in January because was in the news the most for having the largest jump in price. GameStop (GME) was trading around $17 at the beginning of the year in January and experienced an incredible meteoric rise that saw its peak price of $347 on January 27th. The price experienced an immediate drop in price and by the end of the following week, it was trading around $60. Like GME, all of these meme stocks saw explosive growth followed by an immediate drop in price but they have all been trading much higher than they were prior to the January short-squeeze.
The fast-food chain that’s home to the Frosty and Baconator, Wendy’s (WEN), and Clover Medical (CLOV) are the newest companies to be added to the meme stock watchlist. Unlike its fellow meme stocks, Wendy’s has not really been struggling and has enjoyed a fairly stable stock price. According to Yahoo Finance, Wendy’s only had about 4.64% of its outstanding shares being sold short. This counters the meme stock norm where they have been the targets of hedge funds short selling and trading options on them betting that their stock prices will go down.
This recent retail investor revolution has done more than make some people a lot of money. This fight against the hedge funds for their extreme short selling of companies has exposed the prevalent problem on Wall Street of naked short selling and synthetic shares. Both of these practices are illegal, but it has become apparent that Wall Street has been doing it anyways. Naked shorts and synthetic shares involve a big bank or brokerage, like JP Morgan or Robinhood for example, selling “borrowed” shares before they have actually located and borrowed the shares to sell. When this happens, the sellers are making money off shares that do not actually exist, or synthetic shares.
I think it is awesome how the retail investor community that refers to themselves as Apes, has not only fought the hedge funds and won billions of dollars away from them, but they have exposed this illegal practice. What are your thoughts? Leave a comment below.