Wolfspeed Stock Soars 9.36% Amid Bankruptcy Rumors

On May 23, 2025, Wolfspeed's stock surged by 9.36% in pre-market trading, marking a significant rebound after a period of turbulence.

Wolfspeed, a semiconductor company specializing in silicon carbide and gallium nitride technologies, has faced substantial challenges recently. The company issued a "going concern" warning in its quarterly filing, indicating doubts about its ability to continue operations over the next year. This warning, coupled with a Wall Street Journal report suggesting a potential prepackaged Chapter 11 bankruptcy filing, has rattled investors and led to a significant drop in stock value.

Wolfspeed's financial struggles are rooted in its ambitious expansion plans, including the construction of a large silicon carbide materials plant in North Carolina and a fabrication facility in New York. These projects have encountered delays and cost overruns, straining the company's balance sheet. Additionally, increased competition from cheaper Chinese manufacturers and slower-than-expected EV demand have further exacerbated Wolfspeed's financial woes.

Despite these challenges, there are potential paths to recovery. Wolfspeed is negotiating with creditors to restructure its debt and has initiated a restructuring plan aimed at achieving $200 million in annual cash savings. The company is also banking on its transition to 200-millimeter wafers to improve efficiency and scale production. However, the road to recovery remains uncertain, and investors are advised to proceed with caution.