Proportions of Speed of the Wolf (NYSE: WOLF) sees explosive gains in Wednesday's trading. The silicon carbide specialist's share price was up 25% as of 1 pm ET today amid a backdrop of a 1.5% gain for the S&P 500 index and a jump of 2% for the Nasdaq Composite index.
Wolfspeed is surging today following fundraising news and the company's CHIPS Act announcement. The stock is also getting a boost from the latest inflation report from the Bureau of Labor Statistics (BLS).
Wolfspeed issued a press release today announcing that it has raised approximately $200 million through new stock sales. The company sold approximately 27.79 million shares of common stock and will use the proceeds to strengthen its capital structure, reduce leverage, and address remaining maturities on its balance sheet.
Now that the stock sale is complete, Wolfspeed says it is one step closer to receiving funding earmarked for it through the CHIPS Act. While the company ended its last reporting quarter with $1.7 billion in cash and investments, it posted big losses and ended the period with $3 billion in long-term debt and $3.1 billion in long-term liabilities. CHIPS Act funding should give the company some much needed financial flexibility.
The stock is also climbing thanks to bullish macroeconomic news. The latest Consumer Price Index report showed that core inflation came in at 3.2% in December, below the 3.3% mark targeted by the average economist estimate. The report has eased fears about inflation and makes it more likely that the Federal Reserve will continue to cut interest rates this year.
Despite today's explosive gains, Wolfspeed stock is still down 82% over the past year. The semiconductor company has struggled as demand for electric vehicles has weakened and planned expansion initiatives have been shelved. The silicon carbide specialist is also still in the process of finding its next CEO.
In another press release issued today, Wolfspeed announced that it will announce results for the second quarter of its current fiscal year on January 29. The company will also hold a conference call to discuss the results, business operations, and initiatives in the future.
Investors will get an in-depth look at the state of the business with the upcoming quarterly report, and the company may share details about its leadership transition plans and future growth initiatives.
On the heels of a massive selloff for the stock, Wolfspeed could have big rebound potential — but the company will need to show it has a viable path to improving its margins.