Wolfspeed’s shares (WOLF) closed almost 100% higher on Tuesday, July 1, even if the semiconductor company filed a request for the bankruptcy protection in chapter 11, which is generally considered to be a sign of distress.
Investors reacted positively to what should have been a negative announcement, probably due to a mixture of speculative negotiations and large expectations that bankruptcy will help the wolf restructure its debt.
Despite this week’s rally, Wolfpeed Stock is negotiated at a fraction of the price at which it started 2025.
Wolf shares climbed mainly on Tuesday because the company’s bankruptcy deposit is part of its planned restructuring and supported by creditors who reduces its debt by $ 4.6 billion and reduces annual interest payments by 60%.
Consequently, investors do not consider it as a collapse, but as a financial reset. With more than 97% of first -class guaranteed ticket holders already on board, Wolfspeed said that she planned to leave bankruptcy by the end of the third quarter, armed with a cleaner and $ 1.3 billion in cash to finance operations.
Investors bet this leaner capital structure will allow the listed company at the NYSE to refocus on its strong growth silicon carbide activity and recover its competitive edge – potentially leading to a significant recovery in the stock of Wolfpeed over time.
Yes – Wolfspeed shares are far from attractive after a 100% on Tuesday rally.
Despite the restructuring, the semiconductor stock remains a highly speculative bet. Wolfspeed has burned in cash for years, losing $ 1.1 billion alarming in the last 12 months with negative operating margins above 60%.
Even after having reduced debt, shares are faced with massive dilution – receiving between 3% and 5% of the company reorganized only.
In addition, Wolf’s revenues continue to miss expectations, and it is lagging behind like Stmicroelectronics (STM) both in execution and the scale. Overall, a deposit of chapter 11 can buy time, but this is not a complete solution to what is wrong with the wolf stock.
Although there is a possibility of rewriting in the coming days, investors should note that before today, Wall Street had a consensual “maintenance” note on the stock of Wolfpeed.
