Wolfspeed stock kicked off Tuesday with a 35% uptick in pre-market trades after Monday’s eye-popping rally.
The company just wrapped up a tough Chapter 11 bankruptcy, slashing its massive debt and hitting the reset button on its finances.
That fresh start has investors feeling hopeful about Wolfspeed’s future in the chip business.
But with such big moves come big risks, as the Wolfspeed stock has been all over the place lately, and the company still has plenty to prove before things settle down and it starts turning steady profits.
Wolfspeed stock: Putting recent rally in context
Wolfspeed’s recent stock rally has been nothing short of dramatic, with shares soaring over 1,700%.
But beneath that eye-popping number lies a story about what really happened, and why many investors didn’t see those gains translate into actual profits.
The huge rally followed Wolfspeed’s emergence from Chapter 11 bankruptcy, where the company wiped out its old shares and replaced them with a new, much smaller pool of stock through a reverse split.
For most shareholders who held onto the old stock, this meant their ownership was heavily diluted, and although the stock price jumped, the increase didn’t fully compensate for the lost shares.
This reset was essentially a financial and operational reboot.
Wolfspeed cut its debt by roughly 70%, easing its cash interest burden and repositioning itself for growth in the semiconductor market, especially in energy-efficient silicon carbide chips used in electric vehicles and industrial applications.
The company also revamped its leadership and moved its legal home to Delaware.
However, the excitement around the rally masks the reality that Wolfspeed is still navigating a challenging road to profitability.
The stock’s wild price swings are largely driven by speculation and the scarcity of available shares, rather than solid fundamental gains.
What analysts say?
Wall Street analysts hold a cautious stance on Wolfspeed stock despite the stock’s recent meteoric rise.
According to market observers, the consensus rating leans toward “Hold,” with mixed opinions spread across “Buy,” “Sell,” and “Hold” calls.
Out of roughly 10 analysts polled in the past year, around four suggest selling, two advise holding, and four recommend buying the stock.
The average price target hovers near $1.50 to $2.00 per share, which points to a significant downside compared to the current elevated trading levels over $20 following the bankruptcy exit rally.
As per TipRanks: “based on Wall Street analysts offering 12-month price targets for Wolfspeed in the last 3 months. The average price target is $1.50 with a high forecast of $1.50 and a low forecast of $1.50. The average price target represents a -94.87% change from the last price of $29.26.”
Analysts emphasize that Wolfspeed stock surge largely reflects technical restructuring actions, such as the reverse stock split and dramatic debt reduction, rather than solid market-driven growth or profitability improvements.
The company still faces substantial challenges, including volatile share price swings, thin liquidity, and an uncertain path to consistent earnings.
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