Wolfspeed's Volatile Stock: Should Investors Buy Amidst Bankruptcy Proceedings?

Wolfspeed's stock is plummeting today, down 19.4%, following a significant sell-off yesterday. The company's volatility this week is attributed to a big rally after announcing its new CFO, but the stock is likely to plummet when shares are de-listed from the NYSE due to bankruptcy proceedings. Investors should be cautious, as current shareholders may receive only a small valuation slice of the new company after restructuring.

Wolfspeed Inc.'s stock has experienced significant volatility this week, with a sharp sell-off today, down 19.4%, following a substantial rally yesterday. The stock's recent price movements can be attributed to the appointment of Gregor van Issum as the company's new Chief Financial Officer (CFO) and the subsequent announcement of its restructuring plans.

Wolfspeed's stock surged following the appointment of van Issum, who brings over 20 years of experience in the semiconductor industry. However, the stock's recent decline can be linked to the company's ongoing bankruptcy proceedings and the potential delisting from the NYSE [1]. Wolfspeed has filed for Chapter 11 bankruptcy protection as part of a prepackaged restructuring plan aimed at reducing its debt by approximately 70%. This restructuring agreement, supported by over 97% of its senior secured note holders and 67% of its convertible note holders, is expected to cut Wolfspeed's debt by about $4.6 billion and reduce annual cash interest payments by 60% [1].

The company's stock is likely to face further volatility as it navigates through the bankruptcy process and potential delisting from the NYSE. According to the rules of the NYSE, companies are typically delisted from trading after filing for bankruptcy. Wolfspeed's stock would likely continue trading on the over-the-counter (OTC) markets in the lead up to its restructuring, but there's a very good chance that its share price will fall substantially upon being delisted from the NYSE [2].

Investors should be cautious, as current shareholders may receive only a small valuation slice of the new company after restructuring. The restructuring plan aims to wipe out debt, but it also means that shareholders of the old business's common stock will only receive between 3% and 5% of the value of the new company [2]. The company's creditors, including Apollo Global Management Inc., are set to take control under the restructuring plan, which is seen as a strategic effort to strengthen Wolfspeed's capital structure and accelerate its path to profitability [1].

Wolfspeed's current financial standing presents a challenging scenario with high risks and limited immediate remedies. The company's recent financials reflect a bleak picture, with a negative EBITDA of $312.3 million in the last twelve months, a negative free cash flow of approximately $364 million, and a heavy debt burden of nearly $6.52 billion [3]. The company's restructuring plan aims to cut substantial debt, but whether this move will be enough to rebuild confidence and ensure long-term sustainability remains uncertain.

In conclusion, Wolfspeed's stock has experienced significant volatility this week, attributed to the appointment of a new CFO and the company's ongoing bankruptcy proceedings. Investors should be cautious and monitor the company's progress closely as it navigates through the restructuring process and potential delisting from the NYSE.

References:
[1] https://in.investing.com/news/company-news/wolfspeed-appoints-gregor-van-issum-as-new-cfo-effective-september-93CH-4902055
[2] https://finance.yahoo.com/news/wolfspeed-stock-sank-today-buying-225350124.html
[3] https://stockstotrade.com/news/wolfspeed-inc-wolf-news-2025_07_09-2/