TLDR:
- Wolfspeed stock plunged 56-60% following Wall Street Journal reports about potential bankruptcy filing
- The company holds $6.5 billion in debt with only $1.3 billion cash on hand as of March 31
- Apollo Global Management leads a group holding $1.5 billion in senior secured loans with “make-whole” protection
- Wolfspeed recently warned investors about “going concern” risks and cut its 2026 revenue outlook
- Attempts to restructure debt failed after its largest backer rejected proposals in March
Wolfspeed, the American semiconductor manufacturer specializing in silicon-carbide wafers and chip components, is reportedly preparing to file for Chapter 11 bankruptcy within weeks. The news sent the company’s stock plummeting over 56% to $1.38 in premarket trading on Wednesday.
The Wall Street Journal first reported that Wolfspeed is preparing a bankruptcy plan that would have support from most of its creditors. The company did not immediately respond to requests for comment from financial news outlets.
Earlier this month, Wolfspeed acknowledged it was considering either restructuring its debt or filing for bankruptcy. The financial situation appears dire.
As of March 31, the chipmaker reported holding $6.5 billion in debt while having only $1.3 billion cash on hand. This imbalance has created significant financial strain on the company’s operations.
Wolfspeed $WOLF is filling for bankruptcy.
To say options sentiment was bearish on this is an understatement.
Today's net premium, NEGATIVE $3.7 MILLION!
Most active chains $WOLF $3 puts expiring 07/18/2025.
People have been trading the companies downfall for a while, but… pic.twitter.com/1MElEmDBlo
— unusual_whales (@unusual_whales) May 20, 2025
The Path to Financial Trouble
Wolfspeed’s financial troubles have been mounting for some time. The company’s shares had already tumbled 53% this year prior to this latest news, reflecting ongoing market concerns about its financial health.
In October 2024, Wolfspeed secured a $750 million financing deal with investors led by Apollo Global Management. At that time, the company was also expected to receive up to $750 million in funding under the CHIPS Act of 2022.
However, that government funding was tied to Wolfspeed’s ability to refinance its convertible notes maturing in 2026, 2028, and 2029. This refinancing has proven challenging.
The Apollo-led group holds $1.5 billion in senior secured loans, positioning them at the top tier of creditors. This group has veto power over any new secured financing arrangements.
In March, the company rejected several out-of-court settlement proposals from bondholders after its largest backer declined the offers. Those deals included provisions for China’s Renesas Electronics, Wolfspeed’s largest lender, to convert some outstanding convertible notes to equity.
Market Challenges Beyond Debt
Wolfspeed’s problems extend beyond its debt structure. The company has faced decreasing chip demand from automotive and industrial markets.
Competition from Chinese manufacturers has intensified, creating pricing pressure on Wolfspeed’s products. This has led to what some industry observers describe as a price war over N-type SiC substrates, one of Wolfspeed’s specialty products.
The company has attempted to reduce costs by cutting 20% of its workforce and closing some facilities. These measures haven’t been enough to offset the financial pressures.
Recently, Wolfspeed warned investors about “going concern” risks and reduced its 2026 revenue outlook to $850 million, well below analyst consensus expectations.
Analysts who previously rated the stock show mixed perspectives, with TipRanks reporting three Buy ratings, two Hold ratings, and four Sell ratings before this bankruptcy news broke. The average price target was $4.13, which would represent nearly 32% upside from current levels.
However, these ratings were established before the bankruptcy news and are likely to change as analysts reassess the company’s prospects.
Apollo Global Management reportedly has a “make-whole” provision in their agreement with Wolfspeed, which would protect their investment during bankruptcy proceedings.
The stock’s premarket plunge of 56% to $1.38 comes as futures tracking the S&P 500 were down 0.6%, indicating this is largely company-specific news rather than part of a broader market movement.
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