Why Wolfspeed Stock Is Surging Over 50% Premarket Today

The meteoric rally in Wolfspeed's stock on Monday may have further legs as it climbed over 50% in the early premarket session on Tuesday. 

The substantial premarket gains came after the wide-bandgap semiconductor manufacturer, which focuses on silicon carbide and gallium nitride, confirmed via a press statement late Monday that it had completed its financial restructuring and emerged from Chapter 11 bankruptcy protection.

The Durham, North Carolina-based company stated that it has reduced its total debt by approximately 70% and extended debt maturities to 2030, while also lowering annual interest expenses by about 60%. Additionally, the company confirmed it has adequate liquidity to supply customers.

CEO Robert Feurle said, "Wolfspeed has emerged from its expedited restructuring process, marking the beginning of a new era, which we are entering with new energy and a renewed commitment to the growth mindset and entrepreneurial spirit that have powered Wolfspeed since its inception."

Separately, the company announced the appointment of five directors with semiconductor industry knowledge and deep accounting and finance expertise to its board, including Aris Bolisay, who serves as VP, Finance at one of its largest customers, Renesas Electronics.

Wolfspeed stock gained 1,726.45% on Monday after the company announced in a Form 8-K filing that it had canceled its previously issued and outstanding shares, and that its existing shareholders received their pro rata share of 1.31 million shares of its common stock at an exchange ratio of 0.008352. 

The move came as part of its emergence from bankruptcy. As of Monday, the company had a float of 25.84 million, compared to 156.48 million in old shares. Trading of the old stock has been suspended, and it will be delisted, effective Oct. 10.

On Stocktwits, retail sentiment toward Wolfspeed stock flipped to 'bullish' (67/100) by early Tuesday, from the 'bearish' sentiment seen the day before. The message volume on the stream also picked up pace to 'extremely high' levels.

Thanks to Monday's rally, the stock is now up over 230% for the year.

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