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Wolfspeed (WOLF)
NYSE:WOLF
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Wolfspeed
(NYSE:WOLF)
52Neutral
Positive Factors
Electric Vehicles Revenue Growth
Revenue from EVs grew 92% YoY, with revenue now split 70/30 between automotive and Industrial & Energy, driven by $1.4bn in design ins and $800m in design wins.
Restructuring and Funding
WOLF has access to $2.5bn in funding to support their ongoing restructure, alleviating liquidity concerns.
Negative Factors
Device Market Competition
WOLF continues to face stiff competition in the device market from dominant incumbents ON, STM, and IFX.
Wolfspeed (WOLF) vs. S&P 500 (SPY)
Market Cap
$844.75M
Dividend YieldN/A
Average Volume (3M)21.14M
Price to Earnings (P/E)―
Beta (1Y)3.12
Revenue Growth-10.77%
EPS Growth-27.51%
CountryUS
Employees5,013
SectorTechnology
Sector Strength54
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)-7.68
Shares Outstanding155,571,120
10 Day Avg. Volume25,274,057
30 Day Avg. Volume21,140,783
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.09
Price to Cash Flow (P/CF)-1.10
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$8.25Price Target Upside61.45% Upside
Rating ConsensusHold
Number of Analyst Covering13
Wolfspeed Business Overview & Revenue Model
Company DescriptionCree, Inc. is a manufacturer of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. It operates through the following segments: Wolfspeed, LED Products, and Lighting Products. The Wolfspeed segment products consists of silicon carbide (SiC) and gallium nitride (GaN) materials, power devices and RF devices based on silicon (Si) and wide bandgap semiconductor materials. The LED Products segment includes LED chips, LED components and SiC materials. The Lighting Products segment consists of LED lighting systems and bulbs for the commercial, industrial and consumer markets. The Power and RF Products segment includes power devices and RF devices. The company was founded by Calvin H. Carter Jr., John W. Palmour, F. Neal Hunter, Eric Hunter, and John Edmond in 1987 and is headquartered in Durham, NC.
How the Company Makes MoneyWolfspeed generates revenue primarily through the sale of its semiconductor products, which include silicon carbide (SiC) and gallium nitride (GaN) materials, power devices, and RF devices. These products are sold to a diverse range of industries, including automotive manufacturers for electric vehicles, telecommunications companies for 5G infrastructure, and industrial clients for high-efficiency power management solutions. The company capitalizes on the growing demand for energy-efficient and high-performance semiconductor materials, driven by trends such as electrification, renewable energy adoption, and the expansion of wireless communication networks. Strategic partnerships and long-term supply agreements with key players in these sectors also contribute significantly to Wolfspeed's revenue streams, ensuring a stable and growing customer base.
Wolfspeed Financial Statement Overview
Summary
Wolfspeed is grappling with a challenging financial situation characterized by high leverage and significant losses. The company shows some operational effectiveness through gross profits but faces substantial hurdles in achieving profitability and managing debt.Income Statement
Wolfspeed's TTM data shows a challenging financial position with negative net income and EBIT, reflecting ongoing profitability issues. The gross profit margin stands at 12.22%, indicating some level of product profitability, but the net profit margin is deeply negative at -146.13%, highlighting significant losses. Revenue growth is subdued, with a marginal increase from the previous year, suggesting limited top-line expansion.50
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 17.26, indicating significant leverage and potential financial risk. Return on Equity is negative at -319.47%, due to large losses and low equity. The equity ratio is 4.81%, reflecting a capital structure heavily reliant on debt, which could pose risks in volatile market conditions.40
Negative
Cash Flow
Wolfspeed shows negative free cash flow, with a deteriorating free cash flow growth rate, driven by substantial capital expenditures. The operating cash flow to net income ratio suggests that cash flow challenges are in line with the company's earnings difficulties. The financials indicate cash flow constraints amid high investment levels.45
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 776.60M | 807.20M | 921.90M | 746.20M | 525.60M | 470.70M | Gross Profit |
| -49.00M | 77.40M | 279.50M | 249.30M | 164.60M | 158.50M | EBIT |
| -758.60M | -372.00M | -380.60M | -248.10M | -238.40M | -222.60M | EBITDA |
| -481.90M | -145.20M | -71.60M | -131.20M | -173.90M | -73.60M | Net Income Common Stockholders |
| -978.20M | -864.20M | -329.90M | -295.10M | -341.30M | -197.60M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.55B | 2.17B | 2.95B | 1.20B | 1.15B | 1.24B | Total Assets |
| 7.70B | 7.98B | 6.62B | 3.92B | 3.45B | 3.23B | Total Debt |
| 5.79B | 6.29B | 4.18B | 1.03B | 839.10M | 798.80M | Net Debt |
| 4.65B | 5.25B | 4.19B | 582.20M | 460.10M | 350.00M | Total Liabilities |
| 6.67B | 7.10B | 5.00B | 1.48B | 1.33B | 1.14B | Stockholders Equity |
| 1.02B | 882.10M | 1.62B | 2.44B | 2.12B | 2.08B |
| Cash Flow | Free Cash Flow | ||||
| -2.77B | -3.01B | -1.10B | -804.80M | -701.90M | -263.30M | Operating Cash Flow |
| -702.80M | -725.60M | -142.60M | -154.20M | -125.50M | -29.00M | Investing Cash Flow |
| -916.70M | -1.94B | -1.15B | -391.00M | -448.60M | -486.90M | Financing Cash Flow |
| 1.33B | 1.96B | 2.60B | 615.90M | 504.10M | 464.30M |
Wolfspeed Technical Analysis
Negative
5.11
Price Trends
5.99
Negative
8.11
Negative
12.53
Negative
Market Momentum
-0.27
Positive
42.27
Neutral
32.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WOLF, the sentiment is Negative. The current price of 5.11 is below the 20-day moving average (MA) of 5.88, below the 50-day MA of 5.99, and below the 200-day MA of 12.53, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 42.27 is Neutral, neither overbought nor oversold. The STOCH value of 32.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WOLF.
Wolfspeed Risk Analysis
Wolfspeed disclosed 38 risk factors in its most recent earnings report. Wolfspeed reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Wolfspeed Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $28.10B | 94.25 | 4.71% | 3.50% | -44.31% | -86.74% | |
67 Neutral | $52.20B | 20.93 | 28.16% | 1.98% | -4.99% | -9.18% | |
67 Neutral | $18.06B | 11.80 | 18.97% | ― | -14.19% | -27.42% | |
64 Neutral | $2.19B | 48.38 | 2.49% | ― | -21.10% | -80.81% | |
58 Neutral | $21.67B | 10.04 | -18.58% | 2.39% | 5.01% | -23.17% | |
55 Neutral | $6.64B | 245.03 | 0.77% | ― | 9.51% | ― | |
52 Neutral | $844.75M | ― | -128.47% | ― | -10.77% | -27.51% |
* Technology Sector Average
Performance Comparison
WOLF
Wolfspeed
5.11
-20.92
-80.37%
DIOD
Diodes
45.94
-19.68
-29.99%
MCHP
Microchip
51.89
-34.93
-40.23%
NXPI
NXP Semiconductors
201.02
-38.64
-16.12%
ON
ON Semiconductor
42.15
-35.02
-45.38%
QRVO
Qorvo
69.12
-44.46
-39.14%
Wolfspeed Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -14.83% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant growth in EV revenue and progress in cost reduction and wafer production. However, the company faced challenges with revenue decline, negative cash flow, low gross margin, and demand pressures. The sentiment is balanced between positive developments and ongoing challenges.Highlights
Strong Growth in EV Revenue
EV revenue grew by 92% year-over-year, and further growth of 20% to 30% is expected in the upcoming quarter.
Progress in Cost Reduction and Simplification
The cost reduction program is ahead of plan, targeting $200 million in cash savings, reducing the EBITDA breakeven point to under $1 billion on an annualized basis.
200-Millimeter Wafer Production
Wolfspeed is the first to begin commercial production of 200-millimeter substrates, a key competitive advantage, with thousands of wafers shipped and strong yields.
Government Support and Funding
Access to a $2.5 billion funding package, including CHIPS Act funding and 48D tax credits, with ongoing constructive dialogue with the CHIPS program office.
Lowlights
Revenue Decline
Quarterly revenue of $181 million decreased by 7% sequentially, driven by ongoing weakness in the industrial and energy end markets and lower materials revenue.
Negative Free Cash Flow
Free cash flow was negative $598 million due to operating cash flow of negative $195 million and $403 million in capital expenditures.
Low Gross Margin
Non-GAAP gross margin was 1.8%, down 160 basis points quarter-over-quarter, impacted by $29 million of underutilization costs.
Challenges in Demand
Broader macroeconomic pressures and a slower-than-expected EV ramp have challenged industrial and energy demand.
Company Guidance
During the Wolfspeed Q2 Fiscal Year 2025 earnings call, several key financial metrics and strategic initiatives were discussed to guide the company's future performance. Wolfspeed reported Q2 revenue of $181 million, slightly above the midpoint of guidance, with power device revenue at $91 million and materials revenue at $90 million. The company aims to dramatically improve its financial performance by accelerating its path to positive free cash flow and strengthening its balance sheet. This includes reducing CapEx levels for fiscal 2025 to approximately $1.2 billion and minimizing cash use for the remainder of the fiscal year to achieve profitability goals. Wolfspeed is also focused on operational efficiencies, cost reductions, and stricter cash management to lower its breakeven point to under $1 billion in annual revenue. Additionally, they are working towards securing $2.5 billion in funding, including CHIPS Act support, to support long-term growth plans. Non-GAAP gross margin was 1.8%, while non-GAAP operating expenses were $108 million for the quarter. The company ended the quarter with $1.4 billion in cash and liquidity. Looking ahead to Q3 2025, Wolfspeed projects revenue between $170 million and $200 million, with non-GAAP gross margin expected to be between -3% and 7%, and non-GAAP EPS loss projected between $0.88 and $0.76.Wolfspeed Corporate Events
Executive/Board Changes
Wolfspeed Appoints Thomas Werner as Executive Chair
Neutral
Nov 21, 2024
Thomas H. Werner has been appointed as the Executive Chair of Wolfspeed, Inc., with a lucrative compensation package including a $150,000 monthly salary and monthly restricted stock units valued at $225,000. These RSUs are based on the company’s stock performance and vest annually, providing an enticing blend of salary and equity that aligns Werner’s interests with the company’s growth. His role is at-will, reflecting flexibility for both Werner and the company.
Executive/Board ChangesBusiness Operations and Strategy
Wolfspeed Announces CEO Departure and Leadership Transition
Neutral
Nov 18, 2024
Wolfspeed, Inc. announced a significant leadership change with the departure of President and CEO Gregg A. Lowe, who steps down following a board decision to terminate his employment without cause. Thomas H. Werner, previously Chairman, takes over as Executive Chairman to guide the company while a search for a new CEO is underway. This leadership transition aims to maintain the strategic momentum of Wolfspeed in the silicon carbide market, focusing on growth and restructuring goals to enhance profitability and unlock value for shareholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.