June 24 (Reuters) - Wendy's highly shorted shares climbed more than 20% in premarket trading on Wednesday as retail traders flocked to the beaten-down stock, in the latest meme-like rally.

The ticker was the #1 trending stock on retail investor forum Stocktwits on Wednesday morning. It also had the second-highest mentions over the last 24 hours on Reddit forum r/WallStreetBets, according to sentiment aggregator SwaggyStocks.

Retail activity picked up earlier this week with no apparent trigger, with purchases hitting $2.2 million so far, compared to net buys of $109,600 last week, according to Vanda Research data.

Wendy's shares have fallen more than 78 from their June 2021 record highs%, including a 24.9% drop so far this year, as it battles weak sales and pressure from an activist investor. It named a new CEO last month and a new finance chief on Tuesday.

Short interest in Wendy's stock stood at 34% of its free float as of Wednesday, according to ORTEX. Bearish investors in the stock stare at $45 million in paper losses, if the gains hold.

ORTEX co-founder Peter Hillerberg said the stock was primed for a "short squeeze," but was not in one yet as most short sellers were still near their entry price and not forced to cover their positions due to recent share weakness.

"That only changes if the rally keeps running," he added.

Wednesday's move mirrors the Reddit-driven meme stock frenzy of 2021, when amateur investors pushed up shares of video-game retailer GameStop and cinema chain AMC, burning hedge funds who were on the other side of the trade.

Most recently, car-rental company Avis Budget in April witnessed sharp share swings.

Trading activity was robust, with more than $136 million worth of Wendy's shares changing hands as of 8:24 a.m. ET, almost double the one-year average of $68.4 million, according to LSEG data.

Shares were last trading at $7.5.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Sriraj Kalluvila)