Wolfspeed shares are experiencing significant downward pressure, with investor skepticism overshadowing a recent strategic agreement with automotive giant Toyota. The stock closed Friday’s session at $18.56, marking a single-day decline of 6.55%. This price level underscores a dramatic contraction in market valuation to approximately $547 million, capping off a year that has seen the equity lose roughly 16% of its value.
Market participants are heavily discounting the company’s prospects due to the substantial capital expenditures required to scale its silicon carbide (SiC) manufacturing capacity. While the long-term growth narrative for SiC technology is acknowledged, current financial strain appears to outweigh its potential in the eyes of investors.
Key Metrics Highlighting Investor Concern:
- The stock trades at a price-to-sales multiple of just 0.6x, a figure substantially below industry averages.
- Short interest remains exceptionally elevated, representing 27.77% of the freely tradable shares.
- Trading volume continues to be high, yet shows no technical indications of a price bottom forming.
Strategic Toyota Deal Fails to Catalyze Share Price
On December 9th, Wolfspeed announced it would become a supplier of silicon carbide power modules for Toyota’s electric vehicle lineup. The agreement specifies that Wolfspeed’s automotive-grade MOSFETs will be integrated into the onboard charging systems of the Japanese automaker’s vehicles—a development that serves as a strong technological endorsement of the company’s expertise.
However, the market’s reaction was tepid. The positive news proved insufficient to reverse the prevailing negative trend. This suggests that investors are currently assigning greater weight to operational execution and financial stability than to future order book potential, with a cautious outlook remaining dominant.
Should investors sell immediately? Or is it worth buying Wolfspeed?
Elevated Short Interest Reflects Widespread Doubt
The remarkably high short interest of 27.77% signals a pronounced level of market pessimism. This metric indicates that a significant segment of the market is either betting on further price declines or hedging against execution risk.
An analysis published by Simply Wall St on December 14, 2025, encapsulates the sentiment. It notes that investors are heavily discounting the SiC growth story because the “significant investment requirements” are weighing on the balance sheet. The market is awaiting concrete evidence that Wolfspeed can successfully transition from a phase of high capital outlays to one of profitable growth.
Upcoming Shareholder Meeting Draws Scrutiny
All eyes are now on the annual general meeting scheduled for Tuesday, December 16, 2025. Beyond routine agenda items like board elections and auditor ratification, the market will be keenly focused on management commentary regarding the path to profitability, capital allocation strategy, and the revised timeline for production scaling.
Investors are demanding clear answers to pressing questions: How will the company fund its substantial capital requirements? When can Wolfspeed begin to reduce its cash flow burden? Furthermore, how achievable are its production targets given the current market environment?
The coming days will reveal whether company leadership can successfully address these lingering doubts or if short sellers will continue to dictate the market narrative.
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