Jim Cramer said Tuesday that retail investors on Reddit are “spreading their wings” pointing to discussions on r/WallStreetBets that make the case for fast-food chain Wendy's Co, CNBCreported.
What Happened:The television personality singled out a Redditpostby the user Chillznday that expounded why Wendy’s was the perfect stock for the WallStreetBets, or WSB, subreddit.
Chillznday mentioned a new summer salad, Wendy’s social media engagement involving memes, and "chicken tendies" as some of the factors that made the stock a perfect match for WSB.
The Reddit poster also touched on technical aspects of Wendy's stock and mentioned a low float of $17 million, of which 4-10% is short. As per Chillznday, the short will increase as it is a “relatively predictable stock.”
Wendy’s shares soared 25.85% in the regular session on Tuesday and rose another 4.78% in the after-hours trading to $30.25.
Why It Matters:Cramer noted the appreciation in Wendy’s stock was fueled by Chillznday and some other favorable anonymous posts.
“I want you to forget the analysts right now. The person in charge of Wendy’s is Reddit user Chillznda,” said Cramer, as per CNBC.
The analyst also pointed out that the WSB crowd was “spreading their wings, even into an institutional favorite like Wendy’s with a very low short position.”
The Wendy’s move, as per Cramer, is a departure from short squeezes that has been the focus of WSB which lead to stocks such as GameStop Corporation,BlackBerry Ltd, and AMC Entertainment Holdings Inc.
Cramer said that the methodology of valuing stocks by the new class of investors matters.
“If enough people with enough money start valuing stocks a different way, their new metrics matter, too, even if you think they’re absurd,” said the former hedge fund manager.
WSB investors are broadening their horizons, another stock that has emerged as anew darling of the Reddit investorsthis week isClover Health Investments Corp.
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