Why Short Sellers Can Be Both Wrong

Short sellers are often among the most disciplined investors on Wall Street, who are willing to sell in markets where everyone else is buying.

The question is what happens when short sellers get the story wrong. The answer is often a sharp stock price correction. In this case, the correction will be at higher levels, because the broken bear thesis can be good news for investors.

Wendy's: An Industry Veteran Leads

Wendy NASDAQ: WEN is a low-pressure candidate with a short interest of 33% aimed at meme-stock investors. The reason for the short interest is simple: struggling growth, margin pressures, and lack of traction following poor management actions. The caveat of short sellers is that their perspective is often backward-looking, focusing on past results and failing to respond to strategic shifts. As it stands, short interest is likely to remain high, keeping pressure on the market, but early catalysts could cause congestion.

Among them is new CEO Bob Wright. Not only is he a veteran of Wendy's, having worked in many locations before moving on to new opportunities, but he is also credited with reviving other brands. These include the Potbelly Corporation, which he grew and later sold for a profit. Among Wendy's efforts is to scale the number of stores, unlocking international growth opportunities and prioritizing the first digital stores. Evidence of his influence can be seen in the Q2 earnings release expected in mid-August.

Digital is a key factor, which is expected to drive power on the top and bottom lines, with an impact that can be seen immediately after deployment. Notable success stories using a digital-heavy presence include industry leader McDonald's, which supports store traffic and digital growth; Chipotle Mexican Grill, which does the same, is also using digital to open the border; and Starbucks, following in Chipotle's footsteps.

Wendy's stock price winds echo analysts' sentiments, but take that with a grain of salt. While analysts have cut ratings and price targets for the next 12 months, lowering the consensus to Downgrade, internal data is similarly mixed. Coverage remains strong, with 24 analysts following and ratings spread across Buy, Hold and Sell categories. The price target, likewise, shows multiple results, as the lower end places the floor near the 2026 low, while the lower end places the floor near the 2026 low and the higher end predicts upside if the reversal gains traction.

AST SpaceMobile's Liquidity Supports Future Growth

AST SpaceMobile Today

$80.64 -4.49 (-5.27%)

As of 07/6/2026 04:00 PM Eastern

52 week interval

$36.08

▼

$133.86

Target Value

$85.09

AST Space Mobile NASDAQ: ASTS is another short interest candidate that is trending higher, hitting record highs in 2026 and burning more than 20%. Short sellers rely on this trade because of the cash burn, high prices, and risk of execution, as highlighted by the loss of the BlueBird 7 satellite. It failed to reach the correct orbit through no fault of its own. The biggest impact is on service delivery time, but it is limited. Not only will the company recoup the loss through insurance, but the next satellites are predicted to reach double that speed.

What the shorts got wrong is that this near-kill story is backed by strong institutional support and long-term contracts with tier-one 5G service providers. It supports the transition of coverage from ground-based towers, which limit service, to direct space-based 5G access and global coverage for everyone, every time. It is critical to future telecommunications, including bridging the infrastructure gap between ground-based and location-based operations.

AST Space Mobile's reported analyst rating is similarly misleading. Indexed on Reduce, the bulk of MarketBeat's 10 ratings for stocks are Hold or better, with consensus targets predicting modest upside. Upcoming catalysts include the August earnings release, where strategic progress is expected. Among the key details will be liquidity, which will be highlighted by the bears, and liquidity, which is sufficient to sustain operations for the foreseeable future. Not only does the company have nearly four billion dollars in capital, but many of its projects also benefit from non-reducing government awards.

Looking ahead, ASTS has a moat that should ensure its long-term success. By focusing on frequencies that travel on Earth, giant “cell towers,” in space, and direct telecommunications, can provide infrastructure instead of competing with major carriers. For this, it has more than 40 existing agreements with carriers, including Verizon NYSE: VZ and Vodafone, providing fast, cost-free access to millions of subscribers itching for better, consistent coverage. Starlink, which would like a piece of the action, is years behind, focusing on various technologies with its space-based Internet service.

Before you consider Wendy's, you'll want to hear this.

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