Shares of Wolfspeed (WOLF) surged almost 25% on Friday, closing at $36.76, as the silicon-carbide power device maker attracted attention ahead of its upcoming fiscal third-quarter earnings report. The rally followed a regulatory filing revealing that Capital Ventures International and entities linked to Susquehanna had accumulated a 5% stake in the company, representing 2.48 million shares. The Schedule 13G filing indicated the investors do not intend to seek control or influence over the company.
Earnings Preview
Wolfspeed is set to report its fiscal third-quarter results after the market close on Tuesday, May 5. CEO Robert Feurle and CFO Gregor van Issum will lead the earnings call at 5 p.m. Eastern. Investors are keenly focused on updates regarding demand trends, margin performance, and the company's cash management strategy following a year of significant restructuring.
The company, which exited Chapter 11 bankruptcy last year, has been working to stabilize its finances. In March, Wolfspeed raised $475.9 million through a combination of $379 million in convertible notes and $96.9 million in common stock and warrants. The proceeds were used to pay down secured debt, with van Issum noting the transaction would strengthen the balance sheet and reduce annual interest costs by approximately $62 million.
Financial Performance
Wolfspeed's financial results have been under pressure. In its fiscal second quarter, the company reported revenue of roughly $168 million, a net loss of $151 million, and $1.3 billion in cash and short-term investments. For the third quarter, management guided revenue in the range of $140 million to $160 million and indicated gross margin would remain negative. The company attributed the weakness to softer demand for electric vehicles and noted that some customers are seeking alternative suppliers due to the bankruptcy proceedings.
Leadership Changes
On Thursday, Wolfspeed announced two new senior appointments. Brad Kohn will return as executive vice president, chief legal and global affairs officer, effective May 11. Sonja Burfeind will join as vice president of communications on July 1. Feurle stated that these additions would enhance the company's engagement with customers, shareholders, and policymakers, particularly given the importance of legal and government affairs in the current environment.
Competitive Landscape
Wolfspeed operates in the competitive silicon-carbide power device market, which is critical for electric vehicles and renewable energy applications. However, the company faces headwinds from larger rivals such as STMicroelectronics, Infineon, and onsemi. Demand from automotive customers has been sluggish, and the competitive pressure remains intense.
Wall Street analysts are cautious on the stock. According to MarketBeat, Wolfspeed has received one Buy rating, two Holds, and three Sells, with an average price target of $14.33—well below Friday's closing price. The upcoming earnings report could be a pivotal moment: signs of continued weak EV demand or extended negative margins might trigger a sell-off, while stronger orders, cost reductions, or improved factory utilization could buy management more time with investors.
