Wolfspeed stock drops 22% due to poor financial results and outlook, facing significant challenges.

From Nasdaq: 2024-12-24 11:42:00

Wolfspeed (WOLF) shares have dropped 22% in the past month, performing poorly compared to the Computer and Technology sector’s growth of 3.5%. The company’s Q1 fiscal 2025 financial results were disappointing, with revenues of $194.7 million missing estimates. Restructuring costs, facility closures, and foreign sales reliance are pressuring Wolfspeed.

For Q2 fiscal 2025, Wolfspeed anticipates revenues of $160-$200 million, with non-GAAP losses expected in the range of 89 cents to $1.14 per share. The company faces challenges with a revenue forecast decline of 13.91% year-over-year and a significant drop in earnings. Despite the outlook, Wolfspeed focuses on improving profitability and expanding its U.S. production.

Wolfspeed is striving to enhance its capital structure by producing advanced 200mm silicon carbide products. The company aims to generate $3 billion in annual revenues from its 200mm silicon carbide production, targeting the EV, industrial, and energy markets. Wolfspeed has secured up to $2.5 billion in funding to support its growth initiatives and market position.

Although facing challenges, Wolfspeed has taken steps to secure funding and achieve design milestones. The company’s focus on 200mm silicon carbide products aligns with the growing demand in EVs and cleaner energy technologies. Wolfspeed’s stock is currently ranked #3 (Hold), with potential for improvement in the long term. Consider waiting for a more favorable entry point before investing.

NVIDIA (NVDA), Fortinet (FTNT), and OSI Systems (OSIS) are better-ranked alternatives in the tech sector, each holding a Zacks Rank #2 (Buy). These companies offer long-term earnings growth rates of 20.00%, 18.28%, and 12.85%, respectively. Consider exploring these better-ranked options for potential investment opportunities.



Read more at Nasdaq: Wolfspeed Stock Plunges 22% in a Month: What Should You Do Now?