Wolfspeed Shares Plunge 16.22% Amid Layoffs, Funding Uncertainty

Wolfspeed(WOLF) shares plummeted 16.22% intraday, marking a record low as the stock has been on a downward spiral for six consecutive days, with a cumulative decline of 28.76% over the past week.

Wolfspeed's stock has been under significant pressure in recent months, primarily due to a series of internal and external challenges. The company announced layoffs of 180 employees and reduced planned capital expenditures in early March as part of its cost-saving measures. This move was aimed at mitigating financial strain, but it also signaled broader operational difficulties within the company.

Leadership changes have also contributed to the uncertainty surrounding Wolfspeed. On March 27, the company appointed Robert Feurle as its new CEO, replacing interim CEO Thomas Werner. While the new leadership is expected to bring fresh perspectives, the immediate impact on the stock remains unclear, as investors continue to grapple with the company's financial health and strategic direction.

One of the most significant factors affecting Wolfspeed's stock is the uncertainty surrounding the CHIPS Act funding. On March 28, rumors circulated that the company might not receive the anticipated $750 million in funding, which is crucial for Wolfspeed given its high debt levels and recent cash burn. This funding is essential for the company's operations and future growth, and its potential absence has raised concerns among investors about Wolfspeed's ability to sustain its business.

Additionally, Wolfspeed's key markets, particularly the electric vehicle sector, have shown signs of slowing down. This slowdown, combined with tariff uncertainties affecting auto demand, has further exacerbated the challenges faced by the company. The electric vehicle market, which has been a significant driver of growth for Wolfspeed, is now facing headwinds that could impact the company's revenue and profitability in the near future.

These combined factors have created a challenging environment for Wolfspeed, leading to a 47% decline in its stock price in March. As the company navigates through these difficulties, investors will be closely monitoring its strategic initiatives and financial performance to gauge its ability to recover from this downturn.