Wolfspeed (WOLF) stock dropped more than 47% on Friday after rumors spread that the company may no longer get the $1.5 billion in CHIPs Act funding it was expecting. The company makes silicon carbide used in electric vehicles and other tech. Back in January, there were already concerns that some CHIPs Act grants could be delayed or frozen under President Trump’s effort to cut government spending. Analysts at Bank of America had said that Wolfspeed would likely rely on that money to ease financial pressure and help cover its big spending needs.
However, on Thursday, Wolfspeed’s Chairman Thomas Werner told the Triangle Business Journal that the funding would likely “evolve” under the Trump administration but didn’t explain what that means. It is also worth noting that the company has faced multiple struggles lately. In January, it shared mixed earnings and weak guidance, which caused several analysts to lower their price targets. Piper Sandler analyst Harsh Kumar said Wolfspeed is trying to adjust to lower revenue but still isn’t close to breaking even.
While there’s been some growth in EV demand in the U.S., Kumar believes that it’s not enough yet to fix the company’s financial issues. Adding to investor concerns, Wolfspeed announced that it would cut around 180 jobs earlier this month, mostly in materials operations at its Durham and Siler City locations. Furthermore, the company is undergoing a leadership change after it recently announced that Robert Feurle will become CEO starting on May 1.
Is WOLF a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on WOLF stock based on four Buys, seven Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average WOLF price target of $8.25 per share implies 188.50% upside potential.
