Wolfspeed Shares: A Cautious Market Amidst Financial Respite

Emerging from one of its most tumultuous periods, Wolfspeed continues to face investor skepticism. The semiconductor firm exited Chapter 11 bankruptcy proceedings at the end of September 2025, yet its share price remains stagnant. This inertia persists despite a substantial capital infusion and a high-profile partnership, leaving market participants to debate whether the stock presents a value opportunity or a potential trap.

Under the leadership of CEO Robert Feurle, the company's balance sheet has undergone significant change. Debt obligations were reduced by 70 percent, with key maturities successfully extended to 2030. However, the fundamental business reality remains difficult. First-quarter results for fiscal 2026 revealed a loss of $4.12 per share, underscoring how restructuring costs and underutilized fabrication facilities continue to consume capital at a significant rate. The market is currently pricing in these persistent losses.

Capital and Confidence: A Mixed Picture

Two developments in December provided a temporary foundation for stability. First, the company received a tax refund of nearly $700 million. For a firm of its market capitalization, this payment is substantial, boosting cash reserves to approximately $1.5 billion. This liquidity secures funding for ongoing production expansion without an immediate need for further capital raises.

Second, a confirmed partnership with Toyota on December 9th delivered a crucial vote of confidence. The automotive giant's commitment to using Wolfspeed components for its electric vehicle platforms helps dispel concerns that the bankruptcy process permanently damaged relationships with major automakers.

Should investors sell immediately? Or is it worth buying Wolfspeed?

Technicals and Sentiment Signal Continued Pressure

Notwithstanding these positive fundamental developments, technical indicators and market positioning paint a bearish picture. The stock remains entrenched in a downtrend, having recently failed to break through resistance at $20.70. Sustained momentum is unlikely until this level is convincingly overcome. A decline below the $18.06 support level could trigger further selling.

Perhaps more telling is the elevated short interest, which exceeds 16 percent. This indicates that professional investors are either betting on further price declines or hedging heavily against the risks associated with the turnaround plan. So-called "smart money" appears unconvinced that stability has been achieved.

While liquidity for 2026 is now assured, the market demands tangible proof of operational improvement. A sustained shift in sentiment will likely require management to demonstrate concrete progress in manufacturing efficiency in upcoming quarterly reports. Until then, skepticism is set to prevail.