Sometimes stocks go up because of some disfigured logic, Jim Cramer told his Mad Money viewers on Tuesday. This is certainly the case with the Reddit crowd, as these traders are bidding for a stock for almost any reason.
Case in point: Today’s monster rise in Wendy’s inventory (WHOM) – Get the report. There are no fewer than 28 professional analysts covering Wendy’s, and most of them are bullish about the stock after every earnings report. And most of the time nobody cares.
But today Reddit user “Chillznday” announced on the WallStreetBets forum that Wendy’s was the “perfect stock”, especially because the restaurant chain’s summer salad is just so good. That well-founded logic saw Wendy’s shares soar 25.8% to the end, which caught up with most of the restaurant industry.
Cramer is a longtime fan of Wendy’s, calling it an established company with a great CEO and an activist investor who is dedicated to rewarding shareholders. But while he believes in the company’s management and profits, those metrics don’t matter to the WallStreetBets crowd. For them, it’s all about the salads.
In the end, it doesn’t matter why people buy Wendy’s stock, just that they believe in the company. It doesn’t matter if you are a home player or a professional analyst. Every shareholder made a lot of money on Tuesday.
At some point, these meme stocks will run out of breath, Cramer concluded, but we’re still in the early innings and those huge moves are likely to continue to happen.
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Executive decision: Activision Blizzard
Kotick attributed Activision’s success to its continued focus on its customers. He said over 425 million people play their games in 190 countries around the world. Whether you’re a serious competitor or just need a quick distraction for a few minutes, Activision has games that customers love.
Kotick also commented on his recent pay cut, saying Activision is a performance-based company and salaries are not a performance metric. He was happy to base his salary on the 25th percentile of their industry and instead rely on stock-based compensation that only rewards him when the company exceeds its goals.
Finally, Kotick talked about their Call of Duty Endowment, which is a veteran help. He said veterans are three times less likely to find work after returning from service, and the foundation hopes to correct that statistic.
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