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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 1:00 PM ET today amid a 1.5% gain for the market. S&P 500 index and a jump of 2% for the Nasdaq Composite index
Wolfspeed is up today following fundraising news and a CHIPS Act announcement from the company. Stocks are also getting a boost from the latest inflation report from the Bureau of Labor Statistics (BLS).
Wolfspeed issued a press release today announcing that it had raised approximately $200 million through new share sales. The company sold approximately 27.79 million shares of common stock and will use the proceeds to strengthen its capital structure, reduce leverage and address outstanding maturities on its balance sheet.
Now that the stock sale is complete, Wolfspeed says it’s one step closer to receiving the funding earmarked for it through the CHIPS Act. Although the company ended its most recent quarter with $1.7 billion in cash and investments, it is posting heavy losses and ended the period with $3.0 billion in long-term debt and $3.1 billion in long-term liabilities . CHIPS Act funding should give the company the financial flexibility it needs.
The stock is also rising on bullish macroeconomic news. The latest Consumer Price Index report showed core inflation stood at 3.2% in December, below the 3.3% mark expected by the median economist estimate . The report eased fears about inflation and makes it more likely that the Federal Reserve will continue to cut interest rates this year.
Despite today’s explosive gains, Wolfspeed stock is still down 82% over the past year. The semiconductor company has struggled as demand for electric vehicles has weakened and planned expansion initiatives have been scrapped. The silicon carbide specialist is also still in the process of finding its next CEO.
In another press release issued today, Wolfspeed announced that it will release second quarter results for its current fiscal year on January 29. The company will also host a conference call to discuss results, business operations and future initiatives.
Investors will get an in-depth look at the state of the business with the next quarterly report, and the company may share details about its leadership transition plans and future growth initiatives.
After the massive selloff in the stock, Wolfspeed could have great rebound potential, but the company will need to show that it has a feasible path to improving its margins.
