Wolfspeed Shares Experience Extreme Volatility Following Bankruptcy Exit

Investors are grappling with significant uncertainty regarding Wolfspeed’s trajectory. The company’s emergence from Chapter 11 bankruptcy protection has triggered unprecedented share price swings. An initial surge exceeding 1,000% was followed by a sharp correction, including a recent single-day decline of 12.2%. This extreme volatility reflects deep market division over the company’s prospects.

Restructuring Brings Financial Relief and Shareholder Dilution

A radical financial overhaul was finalized when Wolfspeed officially exited its Chapter 11 process in late September 2025. The restructuring dramatically improved the company’s balance sheet, slashing its total debt burden by approximately 70%, from $6.5 billion down to $2 billion. This deleveraging also reduced annual interest expenses by about 60%.

However, this financial rebirth came at a substantial cost to existing shareholders. They were allocated a mere 3% to 5% of the equity in the reorganized entity. The overwhelming majority of the new shares were transferred to former creditors, resulting in a complete shift of corporate control.

Operational Challenges Persist Despite Cleaner Balance Sheet

The core dilemma for Wolfspeed is that a strengthened balance sheet has not resolved its underlying business weaknesses. The company continues to face operational headwinds, including contracting revenues and gross margins that remain deeply negative. These figures highlight that a clean financial statement alone is insufficient to guarantee a company’s health.

Should investors sell immediately? Or is it worth buying Wolfspeed?

This conflict is the primary driver of the stock’s wild fluctuations since the bankruptcy exit. Market sentiment oscillates between euphoria over the eliminated debt load and concern about the persistent operational deficiencies.

Long-Term Growth in Silicon Carbide Offers a Potential Lifeline

A key source of optimism lies in the favorable market dynamics for silicon carbide technology. Industry projections indicate robust growth, with the global market expected to expand from $3.83 billion in 2025 to over $12 billion by 2030. This demand is largely fueled by the electric vehicle industry, renewable energy sectors, and advanced electronics.

The critical question for investors is whether Wolfspeed can successfully position itself to capitalize on this booming market. The company’s ability to translate this industry-wide tailwind into sustainable financial performance will ultimately determine the future of its highly volatile shares.