Ricardo Pillai
5 min read
In This Article:
We came across a bullish thesis on Wolfspeed, Inc. (WOLF) on Substack by LongYield. In this article, we will summarize the bulls’ thesis on WOLF. Wolfspeed, Inc. (WOLF)'s share was trading at $3.34 as of May 12th.
A fleet of electric light vehicles recharging their batteries in a parking lot.
Wolfspeed, Inc. is undergoing a critical transitional phase marked by both operational transformation and financial restructuring as it positions itself to lead in the silicon carbide (SiC) semiconductor market. In its Q3 2025 results, the company reported revenue of $185.4 million, reflecting a modest 2.2% sequential growth but a 7.6% year-over-year decline, narrowly missing analyst estimates. The revenue split shows a growing contribution from power products, which brought in $107 million, largely fueled by automotive sector demand, while materials revenue surged to $78 million, a 50% sequential and 175% year-over-year increase thanks to the scaling of the Mohawk Valley fab. Despite these advances, the company's non-GAAP gross margin remained extremely thin at 2.2%, and its adjusted EPS loss of $0.72, while better than consensus estimates, underscores the company’s ongoing struggles with profitability. Free cash flow was negative $168 million, a function of operational outflows and capital expenditures, though partially offset by $192 million in tax refunds. Wolfspeed ended the quarter with $1.3 billion in cash but carried a significant debt load of $3.47 billion, further pressuring its balance sheet.
Central to Wolfspeed’s turnaround efforts is the ramp-up of its Mohawk Valley facility, which recently achieved a conditional certificate of occupancy and is expected to be fully operational by June 2025. This fab represents the company’s pivot to 200-millimeter wafer production, a move that promises to improve yields, reduce costs, and expand margins over time. Concurrently, Wolfspeed is shuttering its legacy 150-millimeter operations, with the Farmers Branch site already closed and the Durham facility slated for closure in 2025. These strategic shifts are designed to streamline the company’s cost base and better align its manufacturing capabilities with anticipated demand from high-growth markets like EVs, AI data centers, and aerospace applications.
New CEO Robert Feurle has initiated a leadership overhaul to sharpen execution and refocus strategy, appointing a new COO, Chief Business Officer, and global SVP of Sales and Marketing. Feurle’s mandate is clear: stabilize operations and realign Wolfspeed’s financial and strategic resources toward long-term value creation. The company is also actively engaging with the Trump administration in pursuit of CHIPS Act funding, which, if secured, could serve as a major catalyst for both liquidity and credibility in Wolfspeed’s mission to establish itself as a cornerstone of U.S. semiconductor independence. However, these discussions remain fluid, and their outcomes are not guaranteed, introducing a key layer of uncertainty to the investment thesis.
