Why I'm More Bullish On Wolfspeed Now Than Ever

2025-09-11 08:31:51 ET

Investment Thesis

Wolfspeed's ( WOLF ) recent Chapter 11 restructuring took a big step forward this week with a bankruptcy court approval . The stock initially jumped a whopping 65%. It's the bit of good news that bullish investors such as myself have been waiting for. In my previous coverage , I outlined that it would be a long road to recovery for Wolfspeed and that stones such as these would be received by the market very positively. Since my previous buy rating, Wolfspeed shares are up about 14% despite the majority of analysts’ sentiments being negative on the stock. Since initiating my coverage, the stock is up 23%. The bankruptcy approval significantly de-risks its balance sheet. It's set to reduce debt by roughly 70% and cut annual interest costs by 60%. This should give the company a critical financial runway to pursue its silicon carbide (SiC) growth strategy. I understand that near-term profitability remains a challenge with continued negative EBITDA and high capex requirements, but I believe the secular adoption of SiC in electric vehicles and renewable energy provides a clear growth catalyst. If Wolfspeed can successfully ramp its Mohawk Valley 200mm wafer fab toward scale and secure key OEM design wins, the company has the potential to capture a meaningful share of a rapidly expanding $11 to $14 billion SiC market. However, since the stock surged so much yesterday, I see no problem with investors trimming their position in Wolfspeed. There will inevitably be a sell-off after such a big run-up. But shares should settle significantly higher on the back of this positive news....

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