Actions of wolf speed (NYSE: WOLF) are seeing explosive gains in Wednesday trading. The silicon carbide specialist’s share price was up 25% at 1pm today amid 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 the company’s announcement of the CHIPS Act. The stock is also getting a boost thanks to 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 the sale of new shares. 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 is one step closer to receiving the funds set aside through the CHIPS Act. While the company ended its last reported quarter with $1.7 billion in cash and investments, it is posting heavy losses and ended the period with $3 billion in long-term debt and $3.1 billion in long-term liabilities. CHIPS Act funding should give the company some needed financial flexibility.
The stock is also rising on bullish macroeconomic news. The latest Consumer Price Index report showed that core inflation hit 3.2% in December, below the 3.3% mark predicted by economists’ average estimate. The report has eased fears about inflation and makes it more likely that the Federal Reserve will continue cutting 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 canceled. The silicon carbide specialist is also looking for its next CEO.
In another press release issued today, Wolfspeed announced that it would release results for the second quarter of 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 a deeper look at the state of the business with the upcoming quarterly report, and the company may share details about its leadership transition plans and future growth initiatives.
Following the massive stock sell-off, Wolfspeed could have strong turnaround potential, but the company will need to demonstrate that it has a feasible path to improving its margins.