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Wolfspeed (WOLF) shares closed nearly 100% higher on Tuesday, July 1, even though the semiconductor company filed for Chapter 11 bankruptcy protection, which is typically viewed as a sign of distress.
Investors reacted positively to what should have been a negative announcement, likely due to a mix of speculative trading and broad expectations that bankruptcy will help WOLF restructure its debt.
Despite this week’s rally, Wolfspeed stock is trading at a fraction of the price at which it started 2025.
Why Did Wolfspeed Stock Soar on Tuesday?
WOLF shares soared on Tuesday primarily because the company’s bankruptcy filing is part of its planned, creditor-backed restructuring that lowers its debt by $4.6 billion and cuts annual interest payments by 60%.
Therefore, investors are seeing it not as a collapse, but a financial reset. With over 97% of senior secured noteholders already on board, Wolfspeed says it plans to exit bankruptcy by the end of the third quarter, armed with a cleaner balance sheet and $1.3 billion in cash to fund operations.
Investors are betting this leaner capital structure will allow the NYSE-listed firm to refocus on its high-growth silicon carbide business and reclaim its competitive edge – potentially leading to a meaningful recovery in Wolfspeed stock over time.
Is It Too Late Already to Buy WOLF Shares?
Yes – Wolfspeed shares are far from attractive following a 100% rally on Tuesday.
Despite the restructuring, the semiconductor stock remains a highly speculative bet. Wolfspeed has burned through cash for years, losing an alarming $1.1 billion over the past 12 months with negative operating margins exceeding 60%.
Even after slashing debt, equity holders face massive dilution – receiving between 3% and 5% of the reorganized company only.
Plus, WOLF’s revenue continues to miss expectations, and it lags rivals like STMicroelectronics (STM) in both execution and scale. All in all, a Chapter 11 filing may buy time, but it’s not a comprehensive fix to what’s wrong with WOLF stock.
What’s the Consensus View on Wolfspeed?
While there’s a possibility of re-rating in the days ahead, investors should note that heading into today, Wall Street had a consensus “Hold” rating on Wolfspeed stock.
