Wolfspeed's market cap is down to almost $500M. It has a large amount of debt (around $7B) and has been losing a lot of cash in recent quarters. This lead to the stock being very heavily shorted.
The reason for the large debt is because they've been building 2 new factories in US to dramatically ramp up their production.
Wolfspeed qualified for CHIPS funding, but there have been questions about the company successfully getting the grant under the new administration.
I will attempt to address the bearish points above and make my case now.
Wolfspeed's ramp of new factories is almost done so the cash burn should be coming to an end. I expect positive guidance soon.
At the current levels, there seems to be a lot of resistance, it is doing well compared to the market in the past week or so. Large institutions like Blackrock recently increased their position to 18.2 million shares. We also recently found out in the news that George Soros is an investor.
Wolfspeed is already the largest Silicon Carbide wafer and chip manufacturer in the world. They have a backlog of orders (design wins) of around $12B. These are mostly locked in with many billions more in the pipeline (design ins).
The company is of strategic importance to US. The government blocked it's sale to Infineon in the past for this reason.
Wolfspeed is a US chip manufacturer, and one of their new factories is in the swing state of North Carolina. I don't think the administration would let such a company go bankrupt by withholding CHIPS funding. It would look terrible politically. Besides, the Republican governer of North Carolina publicly supported Wolfspeed on X/Twitter.
The company hired a new CEO who was the person in charge of Infineon's blocked acquisition of Wolfspeed at the time. I don't think a company bring someone like that onboard just to declare bankruptcy.
I hold 55000 shares with average price of $4.77 and I am planning to hold long term.
*Not investment advice.