Semiconductor manufacturer Wolfspeed jolted investors with a sobering financial forecast, triggering a sharp decline in its share price. Despite reporting better-than-anticipated quarterly results following its recent bankruptcy exit, the company’s guidance for the upcoming quarter sent its stock tumbling 10.8% in after-hours trading.
Bankruptcy Exit Overshadowed by Weak Guidance
The primary catalyst for the sell-off was Wolfspeed’s second-quarter revenue projection, which fell substantially short of market expectations. The company anticipates revenue between $150 million and $190 million, a figure that lands well below the analyst consensus estimate of approximately $202.7 million. This significant forecast miss has raised serious concerns about the firm’s near-term growth trajectory.
Having formally emerged from Chapter 11 bankruptcy protection on September 29, Wolfspeed presented its first post-restructuring earnings. For the first quarter of fiscal year 2026, the company posted consolidated revenue of $197 million.
While the adjusted loss per share of $0.55 was narrower than feared, the GAAP loss per share reached a substantial $4.12. This wider loss was primarily driven by $504 million in reorganization expenses tied to the bankruptcy process.
Should investors sell immediately? Or is it worth buying Wolfspeed?
Operational Headwinds and Financial Health
A particularly alarming development was the severe contraction in the company’s adjusted gross margin, which plummeted to negative 26% compared to a positive 3% during the same period last year. Management attributed this deterioration to $47 million in underutilization costs at its Mohawk Valley and Siler City manufacturing facilities.
Key Financial Metrics:
* Q1 Revenue: $197 million
* Q1 Adjusted Loss Per Share: $0.55
* Q1 GAAP Loss Per Share: $4.12
* Q2 Revenue Guidance: $150-$190 million
* Liquidity: $926 million in cash and short-term investments
The company further cautioned that persistent market softness is expected to continue throughout fiscal 2026, indicating that the path back to sustained profitability remains a formidable challenge for the chipmaker.
Ad
Wolfspeed Stock: Buy or Sell?! New Wolfspeed Analysis from March 25 delivers the answer:
The latest Wolfspeed figures speak for themselves: Urgent action needed for Wolfspeed investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from March 25.
Wolfspeed: Buy or sell? Read more here...
