Wolfspeed Inc. finds its equity under persistent selling pressure, with its share price continuing to fluctuate within a volatile range around the $17 to $18 mark. This stagnation presents a notable contrast to recent corporate developments, as the semiconductor manufacturer has successfully fortified its financial position and announced significant partnerships. Market sentiment, however, remains dominated by skepticism over the company’s near-term path to profitability.
Financial Boost Fails to Lift Sentiment
A critical financial update arrived on December 1. Wolfspeed received a tax refund of $698.6 million from the U.S. Internal Revenue Service. This payment, stemming from the Advanced Manufacturing Investment Credit (Section 48D), bolstered the company’s liquid assets to approximately $1.5 billion.
Despite this substantial improvement in liquidity, investor caution persists, largely informed by the most recent quarterly results (Q1 Fiscal Year 2026). The figures reveal ongoing challenges:
- Revenue: $197 million
- GAAP Gross Margin: -39%
- Loss Per Share: $4.12
- Underutilization Costs: $47 million
The deeply negative gross margin and significant fixed costs, particularly at the Mohawk Valley fab, continue to weigh heavily. While revenue from this facility increased to $97 million, costs still substantially outpace earnings.
Strategic Partnerships and Leadership Incentives
The divergence between operational progress and share performance is striking. Wolfspeed has recently achieved several strategic milestones that have yet to translate into market momentum.
Should investors sell immediately? Or is it worth buying Wolfspeed?
On December 9, the company confirmed a major design-win: its silicon carbide components are slated for use in future Toyota electric vehicles. This partnership serves as a validation of Wolfspeed’s technology for mass production.
Subsequently, on December 12, revised employment agreements for the CEO, CFO, and COO were disclosed. The new contracts tie executive compensation, including equity-based awards, to specific performance metrics such as total shareholder return and free cash flow. This move is designed to retain top leadership during a critical turnaround phase.
Valuation and Forward-Looking Challenges
Trading at a price-to-sales ratio of roughly 0.6, Wolfspeed’s stock carries a significant discount relative to the broader semiconductor sector. This valuation implies the market is pricing in either weaker revenue growth or a prolonged journey toward sustained profitability.
For the second quarter of fiscal 2026, management has provided revenue guidance in the range of $150 to $190 million. The critical factor for investor confidence will be the company’s ability to demonstrate tangible margin improvement. As long as the gap between substantial capital investments and operational cash flow remains wide, the share price is likely to stay under pressure—even with a strengthened balance sheet.
Ad
Wolfspeed Stock: Buy or Sell?! New Wolfspeed Analysis from January 30 delivers the answer:
The latest Wolfspeed figures speak for themselves: Urgent action needed for Wolfspeed investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from January 30.
Wolfspeed: Buy or sell? Read more here...
