Bearish Sentiment Intensifies for Wolfspeed Shares

Wolfspeed US9778521024

A surge in bearish options trading is casting a shadow over Wolfspeed Inc. The semiconductor manufacturer, which recently emerged from bankruptcy, is facing renewed skepticism from the market as operational challenges persist and Wall Street maintains a cautious stance.

The options market delivered a stark warning at the week's close. Trading activity in put options, which profit from a decline in the share price, spiked dramatically. Volume soared by 80% on Friday, with nearly 284,000 contracts changing hands. This figure far exceeds the average daily volume of approximately 157,000 contracts, indicating a significant buildup of bets anticipating further price drops. The stock concluded the week at $18.37, having already shed roughly 20% of its value during December.

This pessimism is mirrored in the analyst community. The consensus price target among Wall Street researchers stands at just $10.50, a level substantially below the current trading price. The prevailing recommendation remains "Reduce." While the investment firm Susquehanna set an optimistic $30.00 target following the conclusion of the company's bankruptcy proceedings in September, this view remains an outlier.

Operational Headwinds Undercut Financial Progress

Despite a strengthened balance sheet, Wolfspeed continues to grapple with significant operational hurdles. In early December, the company received a tax refund of nearly $700 million, boosting its cash reserves to around $1.5 billion. However, production issues are dampening the positive impact of this liquidity injection.

Reports indicate that the crucial Mohawk Valley fab is running at only about 25% of its capacity. This low utilization rate raises serious questions about the timeline for achieving sustained profitability. Furthermore, management's recent guidance disappointed the market. For the second fiscal quarter of 2026, Wolfspeed projected revenue in a range of $150 million to $190 million. This forecast fell short of analyst expectations, which had been centered near $232 million. The company cited market softness and customer inventory adjustments as the primary reasons for the cautious outlook.

Strategic Agreements Offer a Counterbalance

Amid the concerns, several strategic developments could help mitigate the downside risk. A supply agreement announced on December 9th with automotive giant Toyota validates the relevance of Wolfspeed's silicon carbide technology for the electric vehicle sector. Additionally, shareholders demonstrated support for the leadership team at the latest annual meeting, approving new executive compensation structures directly tied to the achievement of financial performance goals.

The next critical milestone for investors will be the quarterly earnings report scheduled for February 4, 2026. Market participants will scrutinize this release for tangible progress on fab utilization and confirmation of the revenue guidance. Until then, the substantial gap between the current share price and the low analyst targets is likely to be a source of continued volatility for the stock.