Wolfspeed’s Stunning Collapse: What Went Wrong
The semiconductor industry was on fire in 2024, but Wolfspeed (NYSE: WOLF) was a notable exception. Despite the broader market’s bullish trend, the silicon-carbide technology specialist’s share price plummeted a staggering 84.7% last year, according to S&P Global Market Intelligence. Meanwhile, the S&P 500 index surged 23.3%, and the Nasdaq Composite index rose 28.6%.
Mounting Losses and Debt
Wolfspeed’s struggles were largely due to its inability to stem massive losses. As of its most recent quarterly update, the company had racked up over $750 million in losses over the trailing-12-month period. Moreover, it was saddled with roughly $3 billion in long-term debt and $3.1 billion in long-term liabilities.
Scaling Back Ambitions
The company’s path to profitability was further complicated by its decision to cancel several business scaling projects aimed at boosting sales and earnings. In August, Wolfspeed announced the closure of one of its production facilities in Durham, North Carolina. This was followed by the abandonment of plans to build a $3 billion plant in Germany in October, and the closure of a facility in Texas.
Leadership Shakeup
In November, Wolfspeed CEO Gregg Lowe resigned, and the company began searching for a new leadership team. While the stock initially rallied on the news, it ultimately ended the year with significant losses.
Ongoing Struggles in 2025
Wolfspeed’s woes have continued into 2025, with its share price down roughly 26% year to date. This decline has occurred amidst a relatively stable broader market, with the S&P 500 index and Nasdaq Composite index experiencing modest pullbacks of 0.8% and 1.2%, respectively.
Macroeconomic Pressures and Geopolitical Dynamics
The company’s struggles can be attributed, in part, to macroeconomic pressures and geopolitical dynamics. The latest data from the Bureau of Labor Statistics showed a stronger-than-expected jobs market, raising concerns about inflationary pressures. Additionally, the Biden administration’s recent regulations limiting the export of AI chips to certain countries have led to a more risk-averse approach among investors.
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