What’s Behind The 75% Jump In Wolfspeed Stock?

Wolfspeed stock (NYSE:WOLF) jumped nearly 75% in extended trading on Monday, June 30, after the silicon carbide semiconductor company filed for Chapter 11 bankruptcy protection, marking a dramatic turn in its restructuring efforts. The bankruptcy protection filing represents a strategic opportunity for Wolfspeed to reset its financial foundation. The company expects to emerge from Chapter 11 by the end of the current quarter with substantial improvements:

• Debt Reduction: Overall debt will decrease by approximately 70%, eliminating nearly $4.6 billion in obligations
• Interest Savings: Annual cash interest payments will drop by roughly 60%
• New Financing: $275 million in fresh funding backed by existing creditors provides immediate liquidity
• Cash Position: The company maintains $1.3 billion in cash as of the third quarter ^[1]

This restructuring could position Wolfspeed to compete more effectively in the growing silicon carbide market for electric vehicles without the burden of crushing debt service.

The Financial Mess

Wolfspeed’s path to bankruptcy reflects fundamental operational failures despite operating in a promising market. The company’s financial metrics over the last twelve months paint a clear picture:

• Operating losses: -$510 million (operating margin of -67%)
• Cash flow crisis: Operating cash flow of -$709 million (OCF margin of -93%)
• Net losses: -$1.1 billion (net margin of -146.0%)
• Unsustainable leverage: Debt-to-equity ratio of 73 times, with $4.5 billion in debt against a market cap of just $62 million (as of yesterday’s close)

The company consistently burned cash while struggling to scale production in the competitive semiconductor space. Recent quarterly results showed revenues of only $185 million, missing expectations, with fiscal 2026 sales guidance of $850 million falling well short of the $960 million consensus estimate.

Underlying Risks

Despite the 75% stock surge and debt restructuring, Wolfspeed remains an extremely high-risk investment. Firstly, the company must prove it can achieve profitability post-bankruptcy, something it has failed to do despite years of losses and multiple restructuring attempts. Secondly, the silicon carbide semiconductors face intense competition from established players, such as STMicroelectronics, with stronger balance sheets and proven execution capabilities. Lastly, there is increased dilution in the company as existing shareholders often face significant dilution in bankruptcy proceedings, as creditors typically receive equity stakes in the reorganized company.

Surely, Wolfspeed’s recent restructuring efforts could lead to a significant turnaround. Analysts, on average, estimate a price of $4.20 for WOLF stock, a substantial increase from its June 30 price of $0.40, implying over 10x upside potential. However, despite this potential, the stock appears to be very risky, as discussed above. Just remember – WOLF stock is still a wild ride, and as a long-term investment option, you can explore the Trefis High Quality (HQ) Portfolio, which is rooted in quality that seeks reliability, predictability, and compounding growth. With a collection of 30 stocks, it has a track record of comfortably outperforming the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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1. Wolfspeed’s Press Release, June 30, 2025 [↩]