Wolfspeed Shares Under Pressure Amid Manufacturing Concerns

Wolfspeed US9778521024

Despite recent financial tailwinds, semiconductor manufacturer Wolfspeed is facing intense investor scrutiny. The company's stock value plummeted more than 12% across just two trading sessions, as the market grows increasingly doubtful about its ability to execute a critical manufacturing transition.

The sell-off began on Thursday, with shares opening at $20.29, notably below the prior day's close of $21.13. The weakness persisted throughout the session, driving the price down to $18.56 by the closing bell. Friday failed to bring a rebound, with the stock unable to reclaim the $21 threshold.

At a price of $18.60, Wolfspeed's market capitalization stands at approximately $481 million. Its price-to-sales ratio of 0.8 remains significantly below the industry average of 5.4.

The Core Challenge: 200mm Wafer Production

The primary driver behind the share price collapse is persistent uncertainty surrounding the production of 200-millimeter silicon carbide wafers. Repeated delays in scaling up output at the Mohawk Valley Fab in New York have led investors to question whether management can adhere to its timelines and control costs during the ramp-up phase.

This technological shift is fundamental to future profitability. The larger 200mm wafers offer 1.7 times the surface area of the current 150mm versions, promising substantially lower per-unit costs. However, as long as production struggles, margins remain under water, currently reported at negative 26%.

Positive Developments Overshadowed

The stock's poor performance is striking given a series of ostensibly favorable announcements that have failed to provide lasting support:

• Strategic Partnership with Toyota (December 9): The company secured a deal to supply MOSFETs for the onboard charging systems in Toyota's electric vehicles. CEO Robert Feurle characterized the agreement as an endorsement of Wolfspeed's product quality and reliability.
• Substantial Tax Refund (December 1): Under the CHIPS and Science Act, the U.S. Treasury issued a tax credit refund of $698.6 million to the company. This injection boosted total liquidity to around $1.5 billion, effectively eliminating near-term bankruptcy concerns.
• Successful Debt Restructuring (September 29): Following the completion of a Chapter 11 process, the company reduced its total debt by 70% and slashed annual interest expenses by 60%. Key debt maturities were extended out to 2030.

Wall Street Maintains a Cautious Stance

Analyst sentiment remains largely skeptical. The current consensus rating sits at "Reduce," with an average price target of $10.50—well below the current trading level. The breakdown shows three analysts recommending "Buy," one advising "Hold," and four advocating "Sell."

Individual firms have shown mixed signals: Susquehanna raised its price target to $30 in late October while maintaining a "Neutral" rating. Wall Street Zen upgraded the stock to "Hold" in late November, while Weiss Ratings continues to maintain a "Sell" recommendation.

Financial Performance and Outlook

For the first quarter of fiscal year 2026 (reported October 29), Wolfspeed posted revenue of $196.8 million, slightly exceeding estimates of $195.37 million. The loss per share came in at $0.63, an improvement over the anticipated loss of $0.68.

Looking ahead, management provided revenue guidance for the current quarter in a range of $150 to $190 million. The negative gross margin is primarily attributed to under-utilization costs at the flagship Mohawk Valley facility.

Institutional Activity and the Path Forward

Not all large investors are retreating. Several institutional players increased their stakes during recent volatility:
* GMT Capital Corp. expanded its position by 42.9% in the second quarter.
* Vanguard Group boosted its holdings by 18.8% in Q1, accumulating nearly 19 million shares.
* Neuberger Berman Group increased its stake by a substantial 72.7%.

With $1.5 billion in liquidity, the immediate survival question is resolved. The focus now shifts entirely to execution. Management must demonstrate tangible progress in 200mm wafer production. The planned closure of the outdated Durham facility by year-end is expected to help reduce costs. Wolfspeed has promised a comprehensive financial update for the first half of calendar year 2026.

The upcoming Q2 FY2026 results, expected in early 2026, will provide the first full post-restructuring financial snapshot. Until the company can convincingly show that its production targets are within reach, the stock is likely to remain volatile—strategic partnerships notwithstanding.