Why Wolfspeed Plummeted 47% in March

Core Viewpoint - Wolfspeed's stock has experienced a significant decline of 47.1% in March due to a combination of adverse market conditions, high debt levels, and uncertainty regarding government funding [1][8]. Group 1: Financial Performance and Market Conditions - Wolfspeed has invested billions in domestic silicon carbide plants in the U.S. while accumulating substantial debt [1]. - The company is facing a downturn in its key automotive and industrial markets, exacerbated by tariff uncertainties that threaten auto demand [2][8]. - Wolfspeed has approximately $6.4 billion in debt against$1.4 billion in cash, having burned through $1.15 billion in cash in the last six months [7]. Group 2: Company-Specific Events - In March, Wolfspeed announced layoffs of 180 employees and plans to reduce capital expenditures by$150 million to $200 million in fiscal 2026, with additional cuts in fiscal 2027 [3]. - The appointment of Robert Feurle as CEO on March 27 followed the resignation of the previous CEO, but the impact on stock performance was unclear [4][5]. - Rumors regarding the potential loss of$750 million in CHIPS Act funding led to a sharp decline in stock price, indicating investor concerns about future cash flow [6][9]. Group 3: Strategic Outlook - Despite the challenges, Wolfspeed is focused on building manufacturing capacity in the U.S., aligning with governmental goals [8]. - The uncertainty surrounding the CHIPS Act funding raises questions about the company's financial stability and future operations [9]. - There is a possibility of restructuring or bankruptcy, which could allow operations to continue under new ownership, but current equity holders may face significant losses [10].