WOLF - Wolfspeed: Down But Not Out

2024-07-09 03:41:49 ET

Summary

• Wolfspeed stock has experienced a significant decline of 63% over the past year.
• The company's vertical integration in SiC manufacturing could lead to increased manufacturing yields and margins, even as CAPEX commitments drop next year.
• Despite short-term challenges such as inventory buildup and gross margin pressures, Wolfspeed's strong EV-related design momentum and future revenue projections make it an attractive investment opportunity.
• The stock has dropped to levels last seen in 2015-2017, from where it saw a bottom and recovered.

Introduction

The stock of Wolfspeed ( WOLF ), a business that was previously noted for its specialization in RF (Radio-frequency) devices but is now a pure-play silicon carbide materials entity, has experienced a disastrous 12 months; over the past year, when the Nasdaq has been resilient, generating returns of +36%, WOLF has proven to be a source of significant wealth destruction, contracting by 63%....

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