TLDR
Wolfspeed stock dropped 16% to $23.99, reaching an intraday low of $23.94.
The proposed $1.5 billion defense loan remains conditional, with no confirmed funding date.
Government warrants could cover up to 7.5% of Wolfspeed’s fully diluted equity.
Wolfspeed registered 58.15 million shares for potential resale, while quarterly revenue declined 24.1%.
A broader technology selloff added pressure as analysts maintained a Hold consensus and $25 average target.
Wolfspeed ( WOLF ) stock fell 16% to $23.99 Wednesday afternoon, reversing gains from last week’s defense financing announcement. Shares briefly touched $23.94 amid a broader technology selloff. The decline followed scrutiny of the chipmaker’s funding terms and weak financial results.
Wolfspeed Inc., WOLF
Wolfspeed Stock Reverses After Loan Announcement
On October 7, Wolfspeed announced a conditional commitment for a $1.5 billion loan from the U.S. Department of War. The proposed financing would run for 30 years and support U.S. production of silicon carbide power devices.
The company plans to upgrade gallium nitride production and develop radiation-resistant chips for defense uses. Meanwhile, Navitas introduced new NVIDIA-linked power technology this week for AI data centers.
The commitment does not guarantee payment. Wolfspeed must complete due diligence, reach final agreements, secure approvals and meet other conditions. No funding is assured.
Resale Filing and Warrants Raise Share Questions
Share sales are another issue for investors. A September Securities and Exchange Commission prospectus registered up to 58.15 million shares for possible resale by existing holders. Registration does not mean those shares have been sold.
Some registered shares relate to convertible debt and existing warrants, which can increase the share count when exercised or converted. Wolfspeed would also grant the government warrants covering up to 7.5% of its fully diluted equity if funding goes ahead. Broadcom’s recent valuation concerns offer another example of investors reviewing chip-sector financing risks.
Analysts remain guarded on Wolfspeed stock. MarketBeat data show a Hold consensus and a $25 average price target. In August, the company reported quarterly revenue of $149.6 million, down 24.1% from a year earlier, with a negative 25% gross margin.
Market Selloff Adds to Chipmaker Pressure
Wolfspeed’s decline came during a wider U.S. stock selloff on October 14. The Nasdaq dropped around 2%, while the S&P 500 lost about 1.3% during the session. Higher inflation data increased concerns about another Federal Reserve rate increase.
Chipmakers faced additional pressure amid questions about spending on artificial intelligence infrastructure. Micron shares faced fresh pressure earlier this week as investors assessed competition and future demand. Wolfspeed traded below its 200-day moving average, reflecting an extended decline from earlier prices.
Wolfspeed stock remained far below its 52-week high of $80.82. The company has not announced a final loan agreement or funding date. Its next financial report will give shareholders another update on revenue, factory costs, and cash needs.
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