Alright, folks, let’s talk about the stock that’s lighting up the market today—Wolfspeed, Inc. (NYSE: WOLF)! As of this writing, this semiconductor player is seeing its shares rocket up over 85% in pre-market trading, and it’s all thanks to a bold move to tackle its massive debt load through a Chapter 11 bankruptcy filing. Now, hold on—bankruptcy might sound like a scary word, but this is a strategic play that’s got investors buzzing with optimism. Let’s break it down, talk about what’s happening, and explore the risks and rewards of jumping into a stock like this. Plus, if you want to stay on top of hot market moves like this one, tap here to get free daily stock alerts sent right to your phone!

Why’s Wolfspeed Making Headlines?

Wolfspeed, a big name in silicon carbide chips—those fancy components powering electric vehicles, renewable energy systems, and even military tech—dropped a bombshell on June 30, 2025. The company filed for Chapter 11 bankruptcy protection as part of a pre-packaged restructuring plan to slash a whopping $4.6 billion off its $6.7 billion debt pile. That’s a 70% haircut on their debt! They’re also looking to cut their annual interest payments by about 60%, freeing up cash to keep the lights on and the factories humming.

Here’s the kicker: this isn’t a fire sale or a company on its last legs. Wolfspeed’s got $1.3 billion in cash as of the third quarter of fiscal 2025, which means they can keep operating smoothly, paying vendors, and delivering chips to customers while they work through this restructuring. The plan has serious backing—97% of senior secured noteholders and over 67% of convertible noteholders, including heavyweights like Renesas Electronics’ U.S. subsidiary, are on board. They’re even securing $275 million in fresh financing to keep things moving. The goal? Emerge from bankruptcy by the end of September 2025, leaner, meaner, and ready to grow.

Investors are eating this up. Why? Because this move signals Wolfspeed’s getting its financial house in order, potentially setting the stage for a comeback in the high-growth silicon carbide market. As of this writing, the stock’s soaring, with some reports pegging gains at 92% to 95% in pre-market action, marking its biggest one-day jump since going public.

What’s the Big Picture?

Let’s zoom out. Wolfspeed’s been under pressure. They’re dealing with a tough market—soft demand for electric vehicles and industrial applications, plus uncertainty around U.S. trade policies and CHIPS Act funding. Back in May, they raised red flags about their financial health, and their stock took a beating, dropping over 86% year-to-date. Add in a $575 million debt payment looming in less than a year, and you can see why they needed a game plan.

But here’s where it gets interesting. Silicon carbide is the future for high-power tech—think EVs, fast-charging stations, and renewable energy grids. Wolfspeed’s tech is cutting-edge, and their U.S.-based manufacturing gives them a strategic edge, especially with the government likely to support domestic chipmakers. The restructuring could position them to capitalize on this growth, especially if they can streamline costs and focus on profitability. New CEO Robert Feurle, who stepped in on May 1, 2025, is already talking about seizing “upcoming opportunities” with their fully automated 200mm manufacturing platform.

Risks: This Ain’t a Free Lunch

Now, let’s not get too starry-eyed. Trading a stock like Wolfspeed right now is like riding a rollercoaster blindfolded. First, the bankruptcy filing means existing shareholders are getting diluted big time—they’ll only hold 3% to 5% of the restructured company’s equity. That’s a tough pill to swallow if you’re already in the stock. Plus, while the plan looks solid, it’s not a done deal. They need court approval, and any hiccups could spook the market.

Then there’s the broader market. Wolfspeed’s revenue dropped from $606.5 million to $560.6 million for the nine months ending March 30, 2025, with a net loss of $939.9 million. Soft demand for EVs and industrial applications isn’t helping, and competition from Chinese players like BYD and NIO, who are building their own silicon carbide supply chains, could eat into Wolfspeed’s market share.

And let’s not forget the volatility. As of this writing, the stock’s at $0.7769 in pre-market, up from $0.3988 at yesterday’s close. But with a market cap of just $63.8 million, this is a small, volatile stock that can swing wildly. GuruFocus flagged 11 warning signs for WOLF, so you’ve got to keep your eyes wide open.

Rewards: Why the Market’s Cheering

On the flip side, the market’s clearly betting on Wolfspeed’s comeback. A leaner balance sheet could give them the flexibility to invest in growth, especially in high-demand sectors like EVs and renewable energy. The $275 million in new financing shows creditors believe in the company’s long-term potential. Plus, their U.S.-based operations could attract government support, especially since silicon carbide is critical for military and aerospace applications.

The stock’s surge also suggests short-sellers might be getting squeezed. Posts on X are buzzing about a potential short squeeze, with volume exploding as the price doubled. If you’re a trader who loves momentum, this kind of action can be a goldmine—but it’s not for the faint of heart.

Trading Lessons: What Can We Learn?

Wolfspeed’s wild ride is a textbook case for traders. First, news drives markets. The Chapter 11 announcement flipped the script from “doom and gloom” to “light at the end of the tunnel,” sparking a massive rally. This shows how quickly sentiment can shift when a company takes decisive action. Second, volatility is your friend and your enemy. A 95% jump is thrilling, but it comes with stomach-churning risks. Always know your risk tolerance before diving into a stock like this.

Finally, stay informed. Big moves like Wolfspeed’s don’t happen in a vacuum. Keeping up with market news can help you spot opportunities—or avoid disasters. Want to stay ahead of the game? Tap here to get free daily stock alerts sent to your phone. It’s a great way to keep your finger on the pulse of the market’s hottest movers and shakers.

What’s Next for Wolfspeed?

Wolfspeed’s got a big summer ahead. They’ve filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, and they’re pushing to get court approval for their plan. If all goes smoothly, they’ll emerge by September 2025 with a stronger balance sheet and a clearer path to profitability. But traders will be watching closely for any signs of trouble—court delays, creditor pushback, or shifts in EV demand could all throw a wrench in the plan.

For now, Wolfspeed’s stock is riding high on hope, but the road ahead is bumpy. Whether you’re a trader looking for the next big swing or an investor eyeing a long-term play, this is one to watch—just don’t bet the farm without doing your homework.