Wolfspeed Stock Surges as Restructuring Optimism Grows

Wolfspeed (WOLF) shares are trading sharply higher after the company initiated a pre-packaged Chapter 11 filing to erase $4.6 billion in debt, a 70% reduction, and slash annual cash interest payments by 60%. The restructuring plan aims to accelerate the company's path to profitability. New CFO Gregor van Issum is seen as a critical addition to guide Wolfspeed through its transformation. WOLF shares are up 7.89% to $1.43.

Wolfspeed (WOLF) shares have seen a significant increase in value, climbing 7.89% to $1.43 on July 2, 2025, following the company's pre-packaged Chapter 11 filing to reduce $4.6 billion in debt [1]. This restructuring plan aims to slash annual cash interest payments by 60% and accelerate Wolfspeed's path to profitability.

The filing, which was announced on June 30, 2025, is part of Wolfspeed's broader effort to cut debt by 70%, or $4.6 billion, while continuing operations. The restructuring includes transferring assets to debt holders like Renesas, leaving shareholders with 3-5% of the new entity's value [1]. This "prepackaged" bankruptcy aims to avoid liquidation but leaves common stockholders nearly wiped out.

The appointment of Gregor van Issum as the new CFO is seen as a critical addition to Wolfspeed's leadership team. Van Issum brings extensive experience from ams-OSRAM and NXP Semiconductors, where he successfully navigated complex restructuring plans [2]. His appointment is expected to play a key role in guiding Wolfspeed through its transformation and stabilizing operations.

However, despite the recent surge in stock price, Wolfspeed's shares remain down 90% year-to-date, and its balance sheet remains strained with $6.7 billion in funded debt. The CFO's $3 million restricted stock units and $450,000 sign-on bonus, a significant payout for a company in bankruptcy, have raised eyebrows among investors [1].

Investors should be cautious, as the stock's post-filing surge reflects speculative bets on short-term trading gains rather than fundamental improvement. The company's negative EBITDA and heavy debt load suggest profitability remains distant. Furthermore, Wolfspeed's imminent delisting from the NYSE and subsequent trading on the OTC market could lead to increased volatility and decreased liquidity [1].

For investors seeking growth without excessive risk, safer alternatives include companies like Power Integrations (POWI) and NVIDIA (NVDA), which combine robust balance sheets, sustainable margins, and exposure to secular trends like AI and electrification [1].

References:
[1] https://www.ainvest.com/news/wolfspeed-volatility-bankruptcy-leadership-risk-reward-turnaround-plays-2507/
[2] https://www.benzinga.com/trading-ideas/movers/25/07/46423000/wolfspeed-stock-is-moving-higher-tuesday-whats-going-on