Investing.com -- Shares of embattled semiconductor company Wolfspeed (NYSE: WOLF) are surging on Monday as the wild ride investors have endured with the stock continues.
As of 11:50 AM ET, Wolfspeed stock is up 25%, although it remains down 51% year-to-date and down 88% over the last year.
On Friday, the company announced that it will report its third-quarter earnings results on May 8, 2025.
Nothing sticks out with the timing of the report. In fact, the report is later than it has been over the past few years. In 2024, Q3 results were out on May 1, and in 2023, they were out on April 26. Further, on March 28th, the company reaffirmed its outlook for the quarter.
At that time, the company said it expects revenue from continuing operations to be $170 million to $200 million and a non-GAAP net loss of $(0.88) to $(0.76) per diluted share.
With the reaffirmation of guidance in late March, Wolfspeed also provided an update on its discussions with lenders, steps to strengthen its capital structure, and talks with the U.S. Department of Commerce.
At that time, the company announced it received $192.1 million in cash tax refunds under the Section 48D advanced manufacturing tax credit, covering fiscal 2023 and 2024 taxes plus interest. This is part of an expected $1 billion in total 48D refunds, with $865 million already accrued and over $600 million anticipated in fiscal 2026. Wolfspeed plans to use the funds to strengthen its capital structure and support general operations, projecting a $1.3 billion cash balance by the end of fiscal Q3 2025. The company is also exploring options regarding its convertible notes and continues to work with federal agencies to secure funding and support U.S. semiconductor manufacturing initiatives.
The May 28th update from the company sent the stock down 52% from $5.38 to $2.59 – a record one-day loss.
The nagging near-term issue is the restructuring of the convertible notes.
According to Morgan Stanley (NYSE:MS) analyst Joseph Moore, the convertible issue is critical because: 1) the company must complete the restructuring to access its first CHIPS Act funding tranche, having already met three other conditions (Apollo-led debt financing, deferred interest payments to Renesas, and $200 million in equity financing), and 2) it must raise $100 million in equity by Q4 2025, with a lower share price increasing dilution risk.
According to Moore, who moved his rating from Equal Weight to Not Rated on the stock earlier in April, the CHIPS Act is first, and fundamentals are second.
With growing Silicon Carbide (SiC) industry headwinds and intensified price deflation pressures from competitors like SICC and Tanke Blue, near-term priorities have shifted. While Wolfspeed’s fundamentals and the Mohawk Valley ramp remain critical long-term, securing the balance sheet—specifically by restructuring the 2026 convertible notes and ensuring access to CHIPS Act funding—now takes precedence over operational milestones, despite the company reaffirming its guidance and financial targets, Moore said.
On the fundamentals, if they start to matter again, analysts Vijay Rakesh at Mizuho sees issues due to SiC oversupply and EV pushouts. “We believe the current slower EV adoption seen in the US/EU has led to a slight oversupply situation in 1H25E with some products seeing lead times as low as 4-12 weeks (DOWN 50%), though we estimate 2H25E could see better SiC demand,” Rakesh stated. “However, current aggressive ramps at both China and Western suppliers could see oversupply again by 2029E.” On April 21, Mizuho lowered its price target on Wolfspeed to $2 from $5 while maintaining an Undperperform rating on the stock.
Overall, with no new developments, today’s move in the stock appears purely speculative, based on hopes that a deal can be reached on the convertible notes.
The recent move in the stock, including today’s big surge, has helped recapture about half of the plunge on March 28th.