Shares of Wolfspeed (NYSE: WOLF) are seeing explosive gains in Wednesday’s trading. The silicon carbide specialist’s share price was up 25% as of 1 p.m. ET today amid the backdrop of a 1.5% gain for the S&P 500 index and a 2% jump for the Nasdaq Composite index.
Wolfspeed is surging today following fundraising news and a CHIPS Act announcement from the corporate. The stock can also be getting a lift from the most recent inflation report from the Bureau of Labor Statistics (BLS).
Wolfspeed published a press release today announcing that it had raised roughly $200 million through recent stock sales. The corporate sold roughly 27.79 million shares of common stock and can use the proceeds to strengthen its capital structure, reduce leverage, and address outstanding maturities on its balance sheet.
Now that the stock sale has been accomplished, Wolfspeed says that it’s a step closer to receiving funding put aside for it through the CHIPS Act. While the corporate ended its last reported quarter with $1.7 billion in money and investments, it’s posting large losses and ended the period with $3 billion in long-term debt and $3.1 billion in long-term liabilities. The CHIPS Act funding should give the corporate some needed financial flexibility.
The stock can also be climbing due to bullish macroeconomic news. The newest Consumer Price Index report showed core inflation got here in at 3.2% in December, below the three.3% mark targeted by the common economist estimate. The report has eased fears surrounding inflation and makes it more likely that the Federal Reserve will proceed to chop rates of interest this 12 months.
Despite today’s explosive gains, Wolfspeed stock remains to be down 82% over the past 12 months. The semiconductor company has struggled as demand for electric vehicles has weakened and planned expansion initiatives have been called off. The silicon carbide specialist can also be still within the technique of finding its next CEO.
In one other press release published today, Wolfspeed announced that it might be publishing results for the second quarter of its current fiscal 12 months on Jan. 29. The corporate may even be hosting a conference call to debate the outcomes, business operations, and future initiatives.
Investors will get an in-depth have a look at the state of the business with the upcoming quarterly report, and it’s possible that the corporate will share details about its leadership transition plans and future growth initiatives.
On the heels of massive sell-offs for the stock, Wolfspeed could have big rebound potential — but the corporate will need to point out that it has a feasible path to improving its margins.