The semiconductor specialist’s first financial release since emerging from bankruptcy has sent shockwaves through the market. Wolfspeed’s fiscal first-quarter 2026 results fell substantially short of expectations, with a weak second-quarter forecast compounding investor concerns. The positive momentum from the company’s recent restructuring has evaporated entirely.
Stock Suffers Severe Selloff
Market reaction to the disappointing earnings was immediate and brutal. Wolfspeed shares opened with a dramatic gap down at $25.94, following a previous close of $31.99. This significant price movement reflects a substantial loss of confidence among market participants as they digest the troubling financial performance.
Key first-quarter metrics revealed:
- Revenue: Approximately $197 million, narrowly missing Wall Street projections
- Adjusted Loss: $0.55 per share, an improvement over worst fears but insufficient to offset revenue concerns
- Gross Margin: The adjusted gross margin collapsed dramatically to negative 26%
- Analyst Response: Multiple research firms have recently downgraded the stock
Second-Quarter Guidance Sparks Alarm
The core issue lies in management’s forecast for the upcoming quarter. Wolfspeed anticipates revenue between just $150 million and $190 million, significantly below the average analyst estimate of approximately $232 million. Such a substantial deviation indicates profound operational challenges.
Should investors sell immediately? Or is it worth buying Wolfspeed?
Company leadership attributes the gloomy outlook to several factors, including persistent market weakness expected to continue throughout fiscal 2026. Additionally, the automotive industry—a crucial market for Wolfspeed’s silicon carbide products—has demonstrated noticeable order reduction.
Profitability Timeline Extends Further
Despite successfully reducing its debt burden through bankruptcy proceedings, Wolfspeed’s path to profitability appears increasingly difficult. Recent figures confirm a worrying long-term pattern: net losses have grown at an average annual rate of 38.7% over the past five years.
No clear indications of a margin recovery are currently visible. Ongoing costs associated with underutilization at the company’s major facilities in Mohawk Valley and Siler City continue to substantially weigh on financial performance. Management now faces intense pressure to scrutinize every expense line to navigate these immediate challenges.
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