Wolfspeed (WOLF, Financial) experienced a dramatic stock decline of approximately 48%, marking its lowest level since 1998. This drop followed the appointment of Robert Feurle as the new CEO, effective May 1, succeeding Gregg Lowe, who was dismissed last November without cause.
The company has been grappling with reduced demand from automotive clients, affecting its profitability. In response, Wolfspeed announced the closure of its 50mm device manufacturing plant in Durham, North Carolina, and a 20% workforce reduction.
Wolfspeed is also awaiting $750 million in federal funding under the U.S. CHIPS and Science Act, a 2022 bipartisan initiative providing $52.7 billion in subsidies for domestic semiconductor manufacturing. However, recent comments by former President Donald Trump suggesting the repeal of the act for debt repayment have raised concerns.
CFRA Research analyst Brooks Idlet noted that the potential withdrawal of this funding could be devastating for Wolfspeed, possibly necessitating significant restructuring to conserve cash. The CHIPS Act is crucial for Wolfspeed's expansion of its silicon carbide semiconductor manufacturing business.
Wolfspeed's stock recently traded at $2.81, with a year-to-date decline exceeding 59%. As of March 27, approximately 32.5% of its shares were shorted, indicating market pessimism about the company's stock performance.
