Wolfspeed shares experienced a dramatic sell-off, plummeting more than 10% in after-hours trading, despite receiving an analyst upgrade to a “Hold” rating. The severe downturn was triggered by a disastrous quarterly forecast that shocked the investment community, overwhelming any positive sentiment from the revised analyst opinion.
Dismal Guidance Overshadows Recent Performance
The company’s leadership issued a second-quarter revenue projection of just $150 to $190 million. This forecast falls substantially short of analyst expectations, which were set above $200 million. At the midpoint of the company’s guidance, this represents a concerning 16% miss compared to market consensus.
Operational and Financial Strain Intensifies
Recent quarterly results highlight several critical challenges:
Should investors sell immediately? Or is it worth buying Wolfspeed?
- Gross Margin Collapse: The adjusted gross margin crashed to -26%, marking a severe deterioration from the 3% margin reported in the same quarter last year.
- Soaring Operational Costs: Underutilization costs at the Mohawk Valley and Siler City manufacturing facilities surged to $47 million.
- Persistent Market Weakness: Management confirmed that soft demand conditions are expected to persist throughout the entire 2026 fiscal year.
Conflicting Signals from Quarterly Earnings
For the first quarter of 2026, Wolfspeed reported revenue of $197 million, a slight 1.1% year-over-year increase. The company’s adjusted loss per share was $0.55, a figure that actually beat analyst forecasts. However, these historical results failed to provide any support for the stock price, as investors are clearly focused on the company’s pessimistic forward-looking statements.
Post-Bankruptcy Challenges Resurface
Having emerged from Chapter 11 bankruptcy proceedings on September 29, 2025, Wolfspeed now confronts a harsh market reality. Despite the balance sheet restructuring achieved through the bankruptcy process, the company is grappling with tepid end-market demand and intense competitive pressure.
The critical question for investors is whether the semiconductor specialist can engineer a turnaround under these difficult circumstances. The combination of a weak financial forecast and deteriorating operational metrics paints a challenging picture for the immediate future. The equity is currently trading with extreme volatility as the market reassesses the company’s competitive position.
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