The stock of Wolfspeed (WOLF) is up 42% after the semiconductor company announced plans to exit Chapter 11 bankruptcy.
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At one point, WOLF stock was up more than 80% as investors cheered the news that the struggling company sees a path forward after entering bankruptcy earlier this year. Specifically, management announced that their plan to reorganize the business had been approved in bankruptcy court.
Wolfspeed also announced that it should emerge from Chapter 11 protection “in the next several weeks” after which it will reduce its debt load by as much as 70%. That news has WOLF stock skyrocketing on Sept. 9. However, it should be pointed out that the company has been treated like a meme stock by retail investors since filing for bankruptcy.
Heavy Debt Load
In early June, Wolfspeed disclosed that it had signed a restructuring deal with its creditors to lower its $4.6 billion debt load. It also aimed to reduce the interest payments on its debt by 60%. The company formally filed for Chapter 11 bankruptcy protection from its creditors on June 30 of this year.
It has been a rollercoaster for WOLF stock in recent months, with the share price both skyrocketing and crashing, often on the same day. Even with the big move higher on Sept. 9, Wolfspeed’s stock is still down 73% this year and trading at only $1.74 per share.
Is WOLF Stock a Buy?
The stock of Wolfspeed has a consensus Moderate Sell rating among three Wall Street analysts. That rating is based on one Hold and two Sell recommendations issued in the last three months. The average WOLF price target of $1.06 implies 38.55% downside from current levels.
