Wolfspeed $Wolfspeed Inc.(WOLF)$ ’s shares closed at $31.10, down sharply after a recent sell-off. Despite this drop, the stock is still up over 40% year-to-date, showing how volatile trading has been.
Earlier this year, Wolfspeed’s stock surged more than 1,100% when a court approved its bankruptcy reorganization plan, marking a dramatic turnaround from financial distress. However, the company also needed to complete a reverse split to maintain its public listing, signaling that challenges remain.
Investors are now reassessing whether the latest weakness signals a buying opportunity or a sign of deeper challenges.
Valuation Looks Low
Wolfspeed is currently trading at a price-to-sales ratio of 1.1x, well below the peer average of 3.1x and the U.S. semiconductor industry average of 4.5x.
This suggests the stock might be undervalued, especially given its steady revenue growth and position in the fast-growing silicon carbide (SiC) chip market.
Profitability Still a Concern
However, Wolfspeed continues to post annual net losses, raising questions about when it can achieve consistent profitability.
The market may be cautious because of this, even as long-term demand for SiC chips remains strong.
A discounted cash flow (DCF) analysis estimates Wolfspeed’s fair value around $320, implying the stock trades at a steep discount. Still, this large gap also reflects high uncertainty around execution, costs, and competition.
Bottom Line
Wolfspeed offers long-term potential at a discounted valuation, but investors should be ready for short-term volatility and ongoing losses.
The next few quarters will be key in showing whether the company can turn improving sales into sustainable profits.
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