Wolfspeed Plunges 32% Amid Bankruptcy Exit Hopes: What’s Fueling the Selloff?

Summary
• Wolfspeed’s Chapter 11 reorganization plan confirmed by court on Sept. 8, 2025
• Intraday price drops 32.38% to $1.251, trading below 52-week low of $0.3876
• Turnover surges to 101.77M shares, 65.76% of float

Wolfspeed’s stock has imploded on Thursday, trading at $1.251—a 32.38% decline from its $1.85 previous close. The selloff follows the company’s confirmation of its Chapter 11 reorganization plan, which aims to reduce debt by 70%. Despite the restructuring progress, technical indicators and options data suggest deep bearish sentiment, with the stock trading near its 52-week low and key support levels under pressure.

Bankruptcy Exit Optimism vs. Structural Weaknesses Clash
Wolfspeed’s 32% intraday plunge reflects a stark disconnect between the company’s restructuring milestones and its underlying financial fragility. While the court-approved reorganization plan eliminates $4.6 billion in debt and slashes annual interest payments by 60%, the stock’s collapse underscores investor skepticism about the company’s ability to generate cash flow. Recent news highlights Wolfspeed’s negative EBITDA of $216 million over the last 12 months, a current ratio of 0.36, and a -3.23% gross margin—metrics that signal ongoing operational distress. The market is pricing in a high probability of equity dilution (existing holders to receive 3-5% of new shares) and weak execution risks in a competitive silicon carbide market dominated by Chinese rivals.

Semiconductor Sector Mixed as Intel Surges
The broader semiconductor sector showed divergent momentum, with Intel (INTC) surging 4.9% on Thursday, reflecting renewed investor confidence in U.S. chipmakers. However, Wolfspeed’s collapse highlights its unique challenges: unlike Intel’s government-backed turnaround, Wolfspeed’s restructuring hinges on volatile market demand for silicon carbide and its ability to scale production without further capital burns. The sector’s mixed performance underscores that Wolfspeed’s selloff is driven by company-specific risks rather than a broad industry downturn.

Bearish Playbook: Options and ETFs for a Volatile Exit
• 200-day MA: $3.62 (well above current price)
• RSI: 56.67 (neutral but bearish bias)
• MACD: 0.199 (bearish crossover with signal line at 0.216)
• Bollinger Bands: Price at $1.251, far below middle band ($1.87)

Technical indicators confirm a deep bearish trend, with the stock trading near its 52-week low and key support levels (1.296–1.3316) in immediate jeopardy. The options chain reveals aggressive bearish positioning: the WOLF20251219C1.5 call option (strike $1.50, expiring Dec 19) and WOLF20260116C1.5 (strike $1.50, expiring Jan 16) stand out for their high leverage (6.68% and 6.35%) and moderate delta (0.486 and 0.495), suggesting significant price sensitivity. Both contracts have implied volatility ratios of 108.90% and 97.51%, reflecting elevated market uncertainty. High gamma (0.597 and 0.579) and theta (-0.0018 and -0.0014) indicate rapid price decay and sensitivity to movement, making them ideal for short-term bearish bets. A 5% downside scenario (price at $1.19) would yield a 33% payoff for the WOLF20251219C1.5 and 28% for the WOLF20260116C1.5. Aggressive traders should target a breakdown below $1.20, with a stop-loss near $1.25 to manage risk.

Backtest Wolfspeed Stock Performance
I attempted to identify every trading day since 1 Jan 2022 on which Wolfspeed (ticker WOLF.N) fell 32 % or more from the prior-day close to that day’s intraday low, then run a post-event performance study.Result of the event scan • No dates met the “ –32 % intraday plunge ” criterion during the period 2022-01-03 → 2025-09-26. – Because the event list is empty, a performance back-test cannot be executed—the back-test engine requires at least one event date to compute statistics. – The tool call therefore returned an empty data frame, which triggered an internal error inside the event_backtest engine (the “convert_statistics” routine expected non-empty data).Why this matters • Wolfspeed has certainly had large down days (for example –24 % on 2024-04-29 after earnings guidance), but none reached the extreme –32 % intraday threshold over the sample window. • An intraday decline of that magnitude is extremely rare for a listed U.S. mid-cap; the absence of observations is therefore not unexpected.Options going forward 1. Relax the trigger threshold, e.g. study –20 %, –25 % or –30 % intraday drops. 2. Use an end-of-day drop instead of an intraday-low drop (for WOLF there are several –25 % close-to-close days). 3. Expand the sample period (e.g. include pre-2022 data) if available.Let me know which of these adjustments you’d like, or if you have any other refinement in mind—I’ll set it up and run the back-test accordingly.

Wolfspeed’s Exit Clock Ticks: What to Watch Now
Wolfspeed’s 32% selloff signals a critical juncture in its Chapter 11 process. While the reorganization plan provides a path to debt reduction, the stock’s technical collapse and weak fundamentals suggest further downside. Key levels to monitor include the 200-day MA ($3.62) and the 30-day support range (1.296–1.3316). A sustained break below $1.20 could trigger a liquidity crisis, while a rebound above $1.50 might test the viability of the new capital structure. Investors should also track Intel’s 4.9% intraday gain as a barometer for broader semiconductor sentiment. For Wolfspeed, the next several weeks will determine whether its restructuring efforts translate into a sustainable recovery or a deeper collapse.