Wolfspeed Stock (WOLF) Craters Over 59% on Bankruptcy News
Shares of semiconductor player Wolfspeed (WOLF) cratered over 59% on May 21 after the Wall Street Journal reported about its probable bankruptcy. The chipmaker and component supplier is set to file for a pre-packaged Chapter 11 bankruptcy within weeks, the report said, and most creditors are likely to support the proceedings.
Confident Investing Starts Here:
Wolfspeed is struggling with a mounting debt load that far exceeds its cash balance. In March, the company rejected several out-of-court settlement proposals from bond holders after its largest backer rebuffed the offers. Now, bankruptcy appears to be the only option as it has become harder to refinance its soon-to-mature debt securities. Diminishing chip demand from the automotive and industrial markets, coupled with stiff competition from Chinese players and tariff uncertainty has undermined Woldspeed's ambitions.
Here's How Wolfspeed Got into This Mess
Wolfspeed is an all-American semiconductor manufacturer and would have really succeeded under President Donald Trump's 'Make in America' initiative, were it not for its debt problems. In October 2024, Wolfspeed secured a $750 million financing deal with a group of investors led by Apollo Global Management APO +0.10% ▲ . At the time, Wolfspeed was also expected to receive up to $750 million in funding under the CHIPS Act of 2022. However, that taxpayer money was contingent on Wolfspeed refinancing its convertible notes maturing in 2026, 2028, and 2029.
The silicon carbide chipmaker has roughly $6.5 billion in debt, while its cash and cash equivalents balance stood at $1.3 billion as of March 31, 2025. Out of the looming debt, the Apollo-led group holds $1.5 billion in senior secured loans, which forms the top-most tier. The group has the right to approve any new secured financing and was also responsible for rejecting all restructuring offers in March. Those deals included a provision for Wolfspeed's largest lender, Japan's Renesas Electronics, to convert some of its outstanding convertible notes to equity. Notably, Apollo has a 'make-whole' provision in the agreement, which means it remains unscathed from Wolfspeed's bankruptcy proceedings.
Wolfspeed recently warned investors about its ' going concern ' risks and also cut its 2026 revenue outlook to $850 million, significantly below the consensus. The company has tried to streamline costs by cutting 20% of its workforce and shuttering facilities. However, to make matters worse, intense competition has led to a heated price war among chipmakers over the N-type SiC substrates, one of Wolfspeed's specialties.
Will Wolfspeed Stock Recover?
On TipRanks, WOLF stock has a Hold consensus rating based on three Buys, two Holds, and four Sell ratings. Also, the average Wolfspeed price target of $4.13 implies 141.5% upside potential from current levels. Meanwhile, the stock has lost 74.3% so far this year, and chances of a recovery seem very slim at the moment.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 minutes ago
- Yahoo
BOJ to postpone rate hike to Q1 next year, tiny majority of economists say: Reuters poll
By Satoshi Sugiyama TOKYO (Reuters) -The Bank of Japan will forego another interest rate hike this year due to uncertainty over U.S. tariff policy, according to a slight majority of economists in a Reuters poll who expect the next 25-basis-point increase in early 2026. Japan's central bank will slow the pace of tapering its government bond purchases from next fiscal year, a majority also said, while three in four surveyed expect the government to cut down on issuance of super-long bonds. The latest results reflect policymakers' apprehension at a time when U.S. President Donald Trump's erratic tariff policies are threatening the economic outlook and as investors are increasingly concerned about Japan's public finances. The BOJ is still pushing for tighter monetary conditions, contrasting with its peers tilting for rate cuts, with its governor Kazuo Ueda stressing the central bank's readiness to keep raising interest rates if underlying inflation approaches its 2% target. "If trade negotiations between the United States and other countries progress, global economic activity is likely to pick up," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute. "The timing of policy interest rate hikes is now more likely to be delayed compared to previous projections, but the BOJ is expected to implement an additional rate hike in the first quarter of 2026." None of the 60 economists in the June 2-10 survey expected the BOJ to raise rates at its upcoming policy meeting on June 16-17. Specifically, 52% of economists, 30 of 58, expected borrowing costs to stay at 0.50% at year-end, the reverse of a poll in May when 52% expected rates at 0.75% by end-2025. Interest rate futures are only pricing in about 17 basis points more of tightening from the BOJ by year-end. More than three-quarters of respondents, 40 of 51, now expect at least one 25-basis-point increase by end-March, the poll showed. Of 35 economists who specified a month for when the BOJ will next hike rates, January 2025 was the top choice at 37%, followed by 23% for October this year and 9% saying March 2025. The BOJ exited a massive stimulus programme in March last year and pushed up short-term interest rates to 0.25% in July and 0.50% in January. Just over half of respondents, 17 of 31, said the BOJ would decelerate its pace of tapering JGB purchases from the current roughly 400 billion yen per quarter beyond April next year. Of those respondents the quarterly taper size prediction ranged from 200 billion yen to 370 billion yen. The BOJ began tapering its huge bond buying last year to wean the economy off decades of massive stimulus even though it still owns roughly half of outstanding JGBs. Three-quarters of economists, 21 of 28, said the government would trim issuance of super-long bonds while the rest said the amount would not change. Yields on super-long JGBs rose to record levels last month due to dwindling demand from traditional buyers like life insurers and concern over steadily rising debt levels. Reuters reported on Monday the government is considering buying back some super-long bonds it issued at low interest rates on top of an expected government plan to trim issuance of super-long bonds in the wake of sharp rises in yields. Seventeen said the issuance of 30-year JGBs would be reduced, followed by 16 selecting 40-year and 10 choosing 20-year bonds. Survey respondents were allowed to give multiple responses. "With the auction results consistently weak, the finance ministry is facing strong pressure to reduce the amount of super-long JGBs issued from July onwards," said Kazutaka Maeda, economist at Meiji Yasuda Research Institute. (Other stories from the June Reuters global economic poll) Melden Sie sich an, um Ihr Portfolio aufzurufen.
Yahoo
18 minutes ago
- Yahoo
AP Top Extended Financial Headlines at 12:05 a.m. EDT
Chinese state media say that the U.S. and China have agreed in principle on a framework to carry out an agreement they reached on resolving their trade disputes last month Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Associated Press
30 minutes ago
- Associated Press
First signs of tariffs' impact on inflation could appear in Wednesday's consumer prices report
WASHINGTON (AP) — U.S. inflation likely picked up a bit last month as President Donald Trump's tariffs start to bite, but lower prices for gas and possibly for air fares and used cars may limit the overall increase. The government's inflation report, to be released Wednesday, is forecast to show that consumer prices rose 2.5% in May compared with a year ago, according to economists surveyed by data provider FactSet. That would be the first increase in four months and up from 2.3% in April. Excluding the volatile food and energy categories, core prices are projected to have risen 2.9% in May from a year earlier, up from 2.8% in April. Trump's tariffs are expected to contribute to the uptick by raising the cost of some imports, including clothes, furniture, appliances, and possibly new cars. Many retailers and some consumer products companies have said they have plans to raise prices or have already done so to cover the cost of the import duties. On a monthly basis, prices are expected to have moved up 0.2% from April to May, while core prices are forecast to have increased 0.3%. At that pace, core prices would rise much faster than the Federal Reserve's 2% target. Economists and the inflation-fighters at the Fed focus on core inflation because it often provides a better sense of where inflation is headed. Inflation has cooled in the past year and, excluding the impact of tariffs, economists say it would be on track to return to the Fed's target, which would allow the central bank to cut its key interest rates. Yet core prices have been more stubborn and were stuck between 3.2% and 3.4% for nearly a year until February, when they started to decline a bit. Last week, the Labor Department's Bureau of Labor Statistics, which compiles the inflation data, said it is reducing the amount of data it collects for each inflation report. Economists have expressed concern about the cutback, and while it isn't clear how sharp the reduction is, most analysts say it is likely to have a minor impact. Still, any reduction in data collection could make the figures more volatile. Nearly all economists expect Trump's duties will make many things more expensive in the second half of this year, including cars and groceries, though by how much is still uncertain. Trump has slapped 30% tariffs on all imports from China, plus a 10% baseline tariff on imported goods from every other country, and 50% import taxes on steel and aluminum. Given the potential for higher prices in the coming months, Fed Chair Jerome Powell and other Fed officials have made clear they will keep their key rate unchanged until they have a better sense of how tariffs will affect the economy. The full impact of the tariffs likely won't be felt until the second half of the year, analysts say, even though many tariffs have been in place, in one form or another, since March and April. There are several reasons it can take months for the duties to fully pass through into retail prices. To begin with, many companies tried to beat the clock by bringing in foreign goods before Trump's tariffs took effect, producing a flood of imports in March. As a result, they have stockpiled goods in warehouses that weren't hit by tariffs and so don't have to raise prices yet. Many companies also held off on hiking prices during the chaos of April and May, when Trump announced sweeping tariffs on imports from nearly 60 countries, only to put them on hold a week later. He also ramped up duties on China to 145%, essentially cutting off trade with the United States' third-largest trading partner. Imports fell sharply in April as a result. The U.S. and China last month agreed to lower duties, with the U.S. now taxing Chinese imports 30%. For many firms, it wasn't worth it to raise prices until they had a better sense of where tariffs would settle. It's possible some duties could fall further if the Trump administration is able to reach trade deals in negotiations with China, the European Union, Japan and other countries. Still, Bryan Eshelman, a partner and managing director at consulting firm AlixPartners, said higher prices 'are coming.' Eshelman expects that shoppers will start feeling the impact in July, and predicts prices for back-to-school items like clothing and backpacks could go up anywhere from 5% to 15%. Retailers may add surcharges tied to higher tariffs costs at the cash register starting in September, he said. 'I think that that's something that retailers are going to be loathe to pull out and do. And so I think they will wait to see how things unfold, ' he said. Most imported goods are actually parts or raw materials for larger products, such as the steel and aluminum goods now facing 50% duties. It will take time for those costs to filter through the supply chain and affect prices. Some stores, however, have already said they will implement higher prices, including Best Buy, Walmart and Lululemon. It was only last month when Trump ripped into Walmart after the nation's largest retailer boldly warned that prices are already starting to go up on items like bananas. Walmart's chief financial officer John David Rainey told The Associated Press that a car seat that currently sells for $350 at Walmart will likely cost customers another $100. Rainey also told analysts at an Oppenheimer investor conference on Monday that for some items, Walmart will reduce inventory by as much as 20% because it expects higher prices will reduce demand, and it doesn't want to be stuck with leftover inventory.
