Wolfspeed (WOLF) Stock: Bankruptcy News Sends Shares Soaring 90% in Premarket

TLDR

Table of Contents

Wolfspeed (WOLF) filed for Chapter 11 bankruptcy protection to address $6.5 billion debt burden
Stock surged 90% in premarket trading following the bankruptcy announcement
Company plans to cut debt by 70% ($4.6 billion) and reduce annual interest payments by 60%
Wolfspeed secured $275 million in new financing from creditors and expects to emerge from bankruptcy by quarter end
Operations continue normally during restructuring process with no disruption to customers or vendors

Wolfspeed stock rocketed 90% in premarket trading Tuesday after the silicon carbide chipmaker filed for Chapter 11 bankruptcy protection. The move aims to slash the company’s crushing $6.5 billion debt load that has weighed on operations.

The Durham, North Carolina-based company announced Monday it would use the bankruptcy process to restructure its finances. Wolfspeed expects to emerge from Chapter 11 by the end of the current quarter with a much cleaner balance sheet.

Wolfspeed, Inc. Files Chapter 11 Bankruptcy
🚨 BANKRUPTCY FILING ALERT 🚨
WOLFSPEED, INC.
Chapter 11 – Southern District of Texas
Filed: June 30, 2025
Case No. 25-90163
📊 Assets: $1B-$10B | Liabilities: $1B-$10B | Total Creditors: 10,001-25,000 | Industry: Industrial… pic.twitter.com/F7XNS6UT5g
— RK | Consultants (@_RKConsultants) June 30, 2025

Under the restructuring plan, Wolfspeed will cut its overall debt by approximately 70%, or nearly $4.6 billion. The company also expects to reduce annual cash interest payments by about 60%.

The bankruptcy filing comes after months of financial pressure. Wolfspeed raised going-concern doubts in May as economic uncertainty and changing U.S. trade policies hurt demand. The company makes silicon carbide chips used in electric vehicles and industrial applications.

Weakening demand from the EV market has particularly hurt Wolfspeed’s business. The more energy-efficient silicon carbide material the company uses offers advantages over traditional silicon but costs more to produce.

Secured Financing Keeps Operations Running

Wolfspeed has secured $275 million in fresh financing to support operations during the bankruptcy process. The funding comes from existing creditors and Renesas Electronics’ U.S. subsidiary through a restructuring agreement reached earlier this month.

The company stressed that business will continue as usual throughout the bankruptcy. Wolfspeed will keep delivering products to customers and paying vendors in the ordinary course of business.

“Wolfspeed is continuing to operate as usual throughout the process, including delivering silicon carbide materials and devices to its customers,” the company said in a statement.

The chipmaker had $1.3 billion in cash as of the third quarter. This cash position should help maintain operations while the restructuring plays out.

Leadership Changes Target Profitability

Wolfspeed recently named former executive vice president David Emerson as chief operating officer. His role focuses on improving margins and boosting operational efficiency as the company works toward profitability.

The appointment signals management’s commitment to addressing the operational challenges that contributed to the financial distress. Emerson’s experience with the company should help navigate the restructuring process.

Investors appear optimistic about the bankruptcy strategy despite the obvious risks. The sharp premarket rally suggests the market views debt reduction as essential for Wolfspeed’s long-term survival.

Shareholders may face dilution as part of the reorganization process. However, the alternative of continued losses under the current debt structure likely presents greater risks.

Analysts remain cautious on the stock despite the restructuring news. TipRanks shows a Hold consensus rating with three Buy ratings, two Holds, and four Sell ratings.

The average price target of $4.13 implies over 900% upside from current levels. However, the stock has lost 94% of its value so far this year before Tuesday’s premarket surge.

The bankruptcy filing represents a critical juncture for Wolfspeed as it attempts to right-size its capital structure. The company expects to complete the Chapter 11 process by the end of the current quarter with substantially reduced debt levels.

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