Stock market today: Stocks fall as investors rotate out of tech into Jackson Hole
In a stark reflection of the challenges facing the tech sector, shares of Wolfspeed, Inc. (NYSE:WOLF) have tumbled to a 52-week low, touching down at $2.41. With a current market capitalization of $407.6 million, InvestingPro analysis indicates the stock is trading below its Fair Value, while the RSI suggests oversold conditions. The company, known for its semiconductor and energy solutions, has faced a tumultuous market environment, leading to a significant downturn in its stock value. Over the past year, Cree Inc. , the parent company of Wolfspeed, has seen its shares decimated, with a staggering 1-year change of -90.23%. This dramatic decline underscores the broader market volatility and investor concerns about future growth prospects within the semiconductor industry. Despite operating with a significant debt burden, the company maintains a healthy current ratio of 3.15, and analysts have set price targets ranging from $2.50 to $12.70. As Wolfspeed navigates through these headwinds, stakeholders are closely monitoring the company’s strategic moves to rebound from this low point. Get deeper insights and access to 16 additional ProTips with a subscription to InvestingPro.
In other recent news, Wolfspeed, Inc. has announced the receipt of a substantial $192 million cash tax refund from the IRS under Section 48D, which is part of an anticipated $1 billion in total refunds. The company plans to use these funds to strengthen its capital structure and for general corporate purposes, projecting a cash balance of approximately $1.3 billion by the end of the third quarter of fiscal 2025. Wolfspeed has reaffirmed its third-quarter fiscal 2025 guidance, with expected revenue from continuing operations between $170 million and $200 million and a non-GAAP gross margin ranging from (3)% to 7%. The company is also forecasting a GAAP net loss between $(295) million and $(270) million, and a non-GAAP net loss between $(138) million and $(119) million.
Additionally, Wolfspeed is in discussions with lenders such as Apollo and Renesas to explore financial alternatives and is seeking federal funding under the U.S. CHIPS Act. However, concerns have arisen as President Donald Trump suggested repealing the CHIPS Act, which could affect Wolfspeed’s anticipated $750 million in federal funding. In leadership changes, Wolfspeed has appointed Robert Feurle as the new CEO, effective May 1, following the removal of former CEO Gregg Lowe. The company also announced a significant workforce reduction, cutting approximately 180 jobs to streamline operations and reduce costs.
Citi analysts have lowered Wolfspeed’s stock price target from $13 to $7, maintaining a Neutral rating. This adjustment follows Wolfspeed’s December quarter results, which showed a 13% year-over-year decline in sales, although slightly better than expected losses per share. The revision reflects weaker automotive demand and increased factory under-utilization costs, which are expected to pressure gross margins in the near term.
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