Wolfspeed’s Strategic Pivot Gains Momentum with Key Financial and Operational Developments

As trading resumed following the holiday period, Wolfspeed shares demonstrated notable resilience. The stock closed the previous Friday at $18.37, posting a gain despite a significant surge in hedging activity. Trading data revealed approximately 283,920 put options changed hands—a figure roughly 80% above average levels. This activity unfolds against a backdrop of transformative corporate events, including a substantial tax refund and new strategic partnerships that are reshaping the company's foundation.

A pivotal development occurred on December 1st, when Wolfspeed confirmed the receipt of a $698.6 million tax refund from the U.S. Internal Revenue Service. This cash infusion, granted under Section 48D of the CHIPS and Science Act, arrived without diluting existing shareholders' equity and has markedly improved the firm's financial structure.

Notably, the refund amount surpassed the company's entire market capitalization of approximately $553 million at the time of the announcement. This influx boosted Wolfspeed's liquidity position to around $1.5 billion, alleviating prior concerns regarding funding stability during its ongoing production transition. Management has already allocated a portion of these funds to reduce secured debt, underscoring a clear priority on strengthening the balance sheet and credit quality. Wolfspeed anticipates total refunds of about $1 billion under the CHIPS program.

Expanding Footprint Through Industry Alliances

The company recently announced a supply agreement with Toyota on December 9th. Wolfspeed will provide its automotive MOSFETs for the onboard charging systems in Toyota's battery electric vehicles (BEVs). CEO Robert Feurle highlighted the stringent quality and reliability standards demanded by the Japanese automaker.

This partnership reinforces Wolfspeed's standing in the silicon carbide power electronics market and serves as a technological endorsement from a major industry player. This follows a November 10th announcement of a collaboration with Hopewind to supply silicon carbide technology for wind energy applications. Together, these agreements extend the company's reach into multiple high-growth sectors.

Governance and Executive Alignment

At the Annual Meeting of Stockholders held on December 16th, shareholders approved all key proposals. These included the election of seven director nominees, approval of the executive compensation plan, and amendments to the employment agreements for the CEO, CFO, and COO.

Furthermore, adjustments were made to CEO Robert Feurle's compensation structure, incorporating performance-linked, equity-based components. These governance decisions signal the board's support for the company's recovery path following its emergence from Chapter 11 bankruptcy proceedings on September 29.

Market Mechanics and Technical Landscape

Unusual Options Activity Amid Strength

The trading session last Friday presented an intriguing dynamic: substantial put option volume failed to depress the share price. The equity advanced during the day, reaching an intraday high of $18.95 before settling at $18.37.

The market's ability to absorb such pronounced hedging demand without a price decline suggests underlying buying support in the spot market. This pattern implies institutional investors may be using options primarily to hedge existing long positions rather than for outright speculative bearish bets.

Key Technical Levels

In the near term, the area around $18.00 has solidified as a support zone. However, volatility has persisted since the company's return to public trading post-bankruptcy. After peaking at $36.60 in early October, the shares underwent a correction, partly driven by concerns over operational execution.

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

Relevant technical levels are as follows:
* Support: $18.00 (psychological level), $17.15 (recent interim low)
* Resistance: $18.95 (Friday's high), $19.86 (closing price from December 11th)

Core Operational Transition

Shifting Production to a Modern Facility

December marks a critical phase in Wolfspeed's manufacturing overhaul. The company is finalizing the closure of its 150-mm wafer fab in Durham, North Carolina. Its future production will be centered on the modern Mohawk Valley Fab in New York, which is designed for 200-mm wafers.

This transition yields several anticipated benefits:
* Increased Output: A 200-mm wafer offers approximately 1.7 times the usable area of a 150-mm wafer.
* Cost Efficiency: More chips per production run lower unit costs.
* Enhanced Automation: A higher degree of automation reduces labor costs compared to legacy processes.

Recent Financial Performance Snapshot

For Q1 of fiscal year 2026 (reported October 29), Wolfspeed posted revenue of $196.8 million, slightly exceeding market expectations of $192.66 million. Its non-GAAP earnings per share came in at -$0.55, an improvement over the consensus estimate of -$0.67.

Profitability, however, remains under pressure. The adjusted gross margin stood at -26%, primarily due to underutilization costs associated with the production transition. Management targets reaching EBITDA breakeven at an annual revenue run rate of $800 million.

Valuation, Outlook, and Forthcoming Catalysts

Divergence Between Cash and Market Value

Despite progress on financing and partnerships, analyst sentiment remains cautious. The current consensus recommendation is "Reduce," with average price targets below the current trading level. This creates a market narrative where skeptical research clashes with positive corporate developments.

A striking feature is the relationship between liquidity and market capitalization. The company holds roughly $1.5 billion in cash against a market value of approximately $475 million. This disparity indicates the market continues to price in significant execution risk related to the transformation strategy.

Upcoming Milestones

Several near-term events are poised to influence the investment thesis:
* Q2 FY 2026 Earnings: Expected release in late January (projected for January 28).
* Mohawk Valley Ramp-Up: Continued production increases throughout fiscal 2026.
* Additional CHIPS Funds: Expected further inflows of approximately $300 million.

The coming weeks will reveal how the put positions established last Friday evolve and to what extent new data on production, margins, and CHIPS Act funds alter the currently priced-in risks. The central driver for the share price in 2026 will be Wolfspeed's ability to execute the Mohawk Valley production ramp-up on schedule and credibly demonstrate a path toward EBITDA breakeven on rising revenue.