Actions of Wolf Speed (NYSE: WOLF) see explosive gains in Wednesday trading. The silicon carbide specialist’s stock price was up 25% as of 1 p.m. ET today, amid a 1.5% gain for the stock. S&P500 index and a jump of 2% for the Nasdaq Composite hint.
Wolfspeed is booming today following fundraising news and an announcement from the company regarding the CHIPS Act. The stock also benefits from the latest inflation report from the Bureau of Labor Statistics (BLS).
Wolfspeed issued a press release today announcing that it has raised approximately $200 million through the sale of new shares. The company sold approximately 27.79 million shares of common stock and will use the proceeds to strengthen its capital structure, reduce debt and address outstanding balance sheet liabilities.
Now that the stock sale is complete, Wolfspeed says it is close to receiving funding under the CHIPS Act. While the company ended its latest quarter with $1.7 billion in cash and investments, it posted significant losses and ended the period with $3 billion in long-term debt and $3.1 billion in dollars of long-term liabilities. The CHIPS Act funding should give the company the financial flexibility it needs.
The stock is also climbing thanks to bullish macroeconomic news. The latest Consumer Price Index report showed that core inflation stood at 3.2% in December, below the 3.3% mark targeted by the average estimate of economists. The report eased fears about inflation and made it more likely that the Federal Reserve will continue to cut interest rates this year.
Despite today’s explosive gains, Wolfspeed stock is still down 82% from last year. The semiconductor company struggled as demand for electric vehicles weakened and planned expansion initiatives were canceled. The silicon carbide specialist is also still in the process of finding its next CEO.
In another press release issued today, Wolfspeed announced that it will report results for the second quarter of its current fiscal year on January 29. The company will also host a conference call to discuss results, business operations and future initiatives.
Investors will get an in-depth look at the state of the company with the next quarterly report, and it’s possible the company will share details about its leadership transition plans and future growth initiatives.
On the heels of the stock sell-off, Wolfspeed could have great rebound potential – but the company will need to show it has a feasible path to improve its margins.
