Wolfspeed Stock Sank Today -- Is This a Buying Opportunity?
- - - Wolfspeed Stock Sank Today -- Is This a Buying Opportunity?
Keith Noonan, The Motley FoolJuly 10, 2025 at 12:53 AM
Key Points -
Wolfspeed stock fell nearly 20% today after posting explosive gains earlier in the week.
The company saw its valuation surge following news that it had named its next CFO.
The terms of the company's restructuring and the likelihood that the stock will be delisted in the near term make Wolfspeed a very risky investment play.
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Wolfspeed (NYSE: WOLF) stock saw a big sell-off on Wednesday. The company's share price fell 19.8% in the session, despite a 0.6% gain for the S&P 500 and a 0.9% jump for the Nasdaq Composite.
Today's big valuation pullback for Wolfspeed stock was a reaction to a much bigger gain that occurred across Monday's and Tuesday's trading. The silicon-carbide specialist announced at the beginning of the week that it had named Gregor van Issum as its next chief financial officer.
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Leadership in this role is important because the company will be moving through a Chapter 11 bankruptcy and restructuring. However, the gains in the company's share price in Monday's and Tuesday's trading may have been significantly out of step with what the CFO news will mean for the company's current shareholders.
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Image source: Getty Images.
Should investors buy Wolfspeed stock after today's pullback?
After struggling for years as demand and margins for its silicon-carbide products came in significantly lower than anticipated, Wolfspeed announced at the end of June that it had submitted preliminary paperwork for Chapter 11 bankruptcy protections. The news actually corresponded with a big rally for the stock -- although shares were already down massively year to date. Even after some recent pops for the stock, Wolfspeed's share price has fallen roughly 70% in 2025.
As per the rules of the New York Stock Exchange (NYSE), companies are typically delisted from trading after filing for bankruptcy. Wolfspeed stock would likely continue trading on the over-the-counter (OTC) markets in the lead up to its restructuring, but there's a very good chance that its share price will fall substantially upon being delisted from the NYSE.
Due to the bankruptcy proceedings and restructuring, Wolfspeed's assets will be transferred to Renesas and other debt holders, and a new company will be created. While this will result in debt being wiped out, the deal will mean that shareholders of the old business's common stock will only receive between 3% and 5% of the value of the new company. It's possible that the stock could bound above current levels in the very near term, but the delisting risks and outlook for the restructuring valuation settlement make Wolfspeed an extremely high-risk investment right now.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wolfspeed. The Motley Fool has a disclosure policy.
Source: AOL Money
