TSLA - Wolfspeed defended by Roth MKM after Tesla-related drop causes worries

During its investor day, Tesla ( NASDAQ: TSLA ) said that it had discovered a way to use less silicon carbide in its vehicles.

However, investment firm Roth MKM said that while Tesla's ( TSLA ) announcement would weigh on silicon carbide companies, including Wolfspeed ( NYSE: WOLF ) stock, there is a "good chance" the claims may not materialize or the entire silicon carbide industry benefits.

"In our opinion, Tesla has a history of overstatement, so in all likelihood this claimed improvement in heat extraction (packaging technology) accelerates industry adoption to WOLF's benefit," analyst Craig Irwin, who has a buy rating on Wolfspeed ( WOLF ), wrote in a investor note.

Wolfspeed ( WOLF ) shares fell more than 10% in early trading , while competitors ON Semiconductor ( NASDAQ: ON ) dropped 5.5% and 5.8%, respectively.

During the event, Tesla's ( TSLA ) president for powertrain engineering Colin Campbell said silicon carbide is an "amazing semiconductor," but added that it is expensive and "really hard" to scale, so using 75% less of it in cars is a "big win for us."

Irwin added that any increase in packaging engineering efficiency would benefit the entire silicon carbide industry and wind up being a long-term benefit for Tesla's ( TSLA ) silicon carbide suppliers, including Wolfspeed ( WOLF ), ON Semiconductor ( ON ) and ST Micro ( STM ).

Last month, Goldman Sachs listed Wolfspeed ( WOLF ) among its favorite stocks for clients to own .

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