Is This Once-Hyped Stock Finally Worth a Second Look?

In the volatile world of investing, once-hyped stocks often linger in the shadows of past overvaluation, waiting for a catalyst to reignite interest. Wolfspeed (WOLF), a pioneer in silicon carbide (SiC) wafers for electric vehicles (EVs) and renewable energy, has long been a poster child for both the promise and perils of high-risk tech bets. After emerging from bankruptcy and securing a $698.6 million cash tax refund in December 2025, the company is now at a crossroads. For value hunters and turnaround specialists, the question looms: Is WOLF finally worth a second look?

A Liquidity Lifeline: The Tax Refund Catalyst

Wolfspeed's recent financial rebirth hinges on a $698.6 million cash infusion from the IRS under the Advanced Manufacturing Investment Credit (AMIC) program. This refund, part of a larger $1 billion in Section 48D benefits, has provided the company with critical liquidity. According to a report, the funds will retire approximately $175 million in outstanding debt and support general corporate purposes. This restructuring not only stabilizes the balance sheet but also buys the company time to scale its 200mm SiC wafer production-a critical step in reducing costs and capturing market share in high-growth sectors like AI data centers and aerospace.

The timing of this refund is pivotal. With oil prices stabilizing and EV adoption accelerating, demand for SiC-a material that enables more efficient power systems-is surging. Wolfspeed's ability to transition from 150mm to 200mm wafers positions it to capitalize on this trend, though execution risks remain.

Scaling Challenges and Market Expansion

Despite the liquidity boost, Wolfspeed faces significant operational hurdles. The company reported a quarterly net loss of $643.6 million in late 2025, underscoring the steep costs of scaling advanced manufacturing. However, its strategic pivot into industrial and energy applications-such as grid infrastructure and defense-adds new revenue streams. As stated by Manufacturing Dive, these segments offer long-term growth potential, particularly as governments and corporations prioritize energy resilience.

A key wildcard is Wolfspeed's short interest, which remains elevated at ~30%. If the stock experiences a sharp rally-driven by positive earnings surprises or improved production metrics-short-sellers may be forced to cover positions, creating a self-reinforcing upward spiral. This dynamic, combined with the company's high reinvestment rates, could amplify returns for those willing to stomach near-term volatility.

Skepticism from Analysts: A Cautionary Note

Not all are convinced. A Sell rating from a recent analyst report pegs WOLF at a $19 price target, reflecting concerns about its path to profitability. The company's free cash flow remains negative, and its valuation still hinges on speculative bets about SiC's dominance in EVs and AI. For conservative investors, these risks may outweigh the potential rewards.

Yet, value investors might see an opportunity in Wolfspeed's discounted equity. Trading as a "call option on survival," the stock's upside is tied to its ability to execute on its 200mm wafer roadmap and secure long-term contracts. If Wolfspeed can demonstrate consistent progress in 2026, the current pessimism could reverse rapidly.

Conclusion: A High-Conviction Bet

Wolfspeed remains a high-risk, high-reward proposition. The $700 million tax refund and strategic pivot to 200mm wafers are undeniably positive catalysts, but they must be paired with operational execution and favorable market conditions. For investors with a multi-year horizon and a tolerance for volatility, WOLF could represent an asymmetric opportunity: a small chance of outsized gains if the company turns around, versus a limited downside in a heavily shorted stock.

However, prudence is warranted. The path to profitability is far from guaranteed, and the Sell rating from analysts highlights the need for rigorous due diligence. Those who choose to revisit WOLF should monitor key metrics: production costs, customer diversification, and the pace of debt reduction. In a market where patience is often rewarded, Wolfspeed's story is far from over.