The Street may be overestimating this fast-food name…

May 19, 2023

Earlier this week I was running a little early to pick up my son from the gym… so I thought, "why not a little treat?"

Wendy's was right there… it had been a while.

As I pulled into the drive-thru, memories of sharing a frosty with my grandma flooded my mind.

"Small nuggets and a small frosty,” I said.

She asked, "strawberry or chocolate?"

This is when I should have known something was very wrong. Everyone knows that a frosty is chocolate. Period.

Nevertheless, I persisted.

I pulled up, paid my tab and grabbed the bag. Found a quiet parking spot, and I was ready for snack heaven.

The first bite of nugget I may actually never forget.

As my teeth sunk into the blob of processed meat, I quickly realized the center of the nugget was ice cold.

Disgusting!

I spit it out immediately and moved on to the real reason for the stop.

As I pulled the lid off of what was supposed to be a masterpiece in mass scale culinary delights, it looked… different.

Visible crystals of ice had formed. My frosty… was frosting over.

Skeptical, but I hadn't come this far to quit. I wish I had.

One bite…everybody knows the rules… and blam… once again I could not spit the stuff out fast enough.

That was it. It was over. The Wendy's that I had fallen in love with as a kid was no more. I was left to wonder… Hey Dave, "where's the beef?"

WEN: Trouble Ahead?

Wendy’s has come a long way since its sunroom eatery, including a fun joyride at the top of the twitter charts for its infamous roasts and customer engagement.

The problem?

It’s starting to fall behind peers.

Wendy’s finds itself in last place vs. other major players in “fast-food” when it comes to mention buzz…

And market share…

The company made headlines this week when it announced its next plans for automation – picture a sonic drive in with a digitized order screen and old-school underground banking tube ready to send over your order, no human needed.

This streamlined future comes alongside an AI integration partnership with Google, which seeks to implement a more efficient chat bot to take orders through its drive-thru.

These investments in technology are helping to drive WEN’s stock higher. Shares are trading +41% above levels from a year ago.

However, data suggests it may be entering overbought territory.

We’re tracking increasing bearish divergence between Wendy’s consumer demand and the company’s stock price.

While automation and AI integrations are a positive step forward, the company still has a long way to go to shift its score into Bullish territory.

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