Where Will Wolfspeed Stock Be in 3 Years?

Core Viewpoint - The recent restructuring of Wolfspeed following its Chapter 11 bankruptcy presents both opportunities and challenges, with significant debt reduction but substantial losses for existing shareholders [2][4][6]. Company Overview - Wolfspeed specializes in silicon carbide (SiC) chips, which are essential for high-voltage and high-temperature applications, making them suitable for electric vehicles and solar power electronics [7]. - The company has a vertically integrated process, producing its devices internally, which positions it favorably amid U.S. efforts to enhance domestic semiconductor manufacturing [9]. Financial Restructuring - The restructuring agreement eliminated 70% of Wolfspeed's $6.6 billion debt, reducing annual interest expenses by 60% and extending debt maturities to 2030 [4]. - Existing shareholders received only 1.3 million new shares in exchange for their legacy shares, representing less than 1% of their previous holdings, with most new equity allocated to creditors [5][6]. Government Support - In 2024, Wolfspeed is set to receive $750 million in funding from the CHIPS Act, although the funds have not yet been disbursed [10]. - The company is also positioned to benefit from tax breaks and incentives for domestic manufacturing introduced by the Trump administration [10]. Current Challenges - Fiscal fourth-quarter earnings revealed a 2% year-over-year revenue decline to $197 million, with operating losses increasing from $148.9 million to $581.6 million [12]. - The loss of U.S. electric vehicle tax credits may negatively impact some of Wolfspeed's key customers, potentially exacerbating its financial difficulties [12].