Wolfspeed’s Disappointing Quarter Sends Shares Tumbling
A Chip Off the Old Block
Wolfspeed, a leading chip specialist, is facing a brutal day in the markets after releasing its first-quarter fiscal report. As of 1 p.m. ET, the company’s share price had plummeted 33.2%. The report, published after yesterday’s market close, revealed a smaller-than-expected loss, but sales and forward guidance fell short of Wall Street’s targets.
A Mixed Bag of Results
Wolfspeed posted a non-GAAP adjusted loss of $0.91 per share on revenue of $194.7 million. While this beats the average Wall Street estimate of a $1 per share loss, revenue was down 1.4% year over year and fell short of the expected $200.4 million. The company’s net loss was a staggering $282.2 million, with $87.1 million attributed to restructuring charges related to the closure of a factory.
Restructuring Ahead
Management anticipates an additional $174 million in restructuring charges in the current quarter, accompanied by a plan to lay off roughly 20% of its workforce. This move is expected to significantly impact the company’s bottom line.
Guidance Falls Short
For the second quarter, Wolfspeed is guiding for sales between $160 million and $200 million, far below the average Wall Street target of $214.6 million. The company’s adjusted loss guidance also disappointed, with expectations ranging from $0.89 per share to $1.14 per share, compared to the anticipated $0.91 per share.
A Year of Struggle
Wolfspeed’s stock has taken a beating this year, down roughly 79% in trading. The company’s valuation now stands at just 1.3 times this year’s expected sales. While the CHIPS Act may bring new funding, Wolfspeed’s competitive positioning and long-term sales and earnings outlooks are being questioned.
A Word of Caution
Before investing in Wolfspeed, consider that the company’s recent report has raised concerns about its future performance. It may be wise to explore other investment opportunities, such as those identified by The Motley Fool Stock Advisor team, which has a proven track record of success.
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