(Bloomberg) — The newest additions to the meme-stock frenzy surged in premarket trading as retail traders latched on to their latest favorites.
ContextLogic Inc. soared 33% and Clover Health Inc. rose 18% as of 5:21 a.m. in New York, both extending huge gains on Tuesday. Fast-food restaurant chain Wendy’s Inc. climbed 4.3%, extending Tuesday’s 26% advance and brushing aside a downgrade from Stifel.
Gains for ContextLogic, the operator of discount online retailer Wish.com, follow discussion of a potential short squeeze on the Reddit forum WallStreetBets. Clover, a health insurer backed by venture capitalist Chamath Palihapitiya, is in demand after retail traders realized that short sellers had been swelling their bets against the stock.
Chatter has built on WallStreetBets this week on the potential for short squeezes, following similar successful ploys on meme stocks including Workhorse Group Inc. and Richard Branson’s space exploration company Virgin Galactic Holdings Inc.
Wendy’s was downgraded to hold from buy at Stifel, which said the stock’s valuation now fully reflects the growth it had been assuming to reach its target price of $25. Analyst Chris O’Cull said in a note that he’s still “constructive toward the company’s fundamental outlook.”
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