Wolfspeed Stock Rallies 23.89% Amid High Volatility, Faces Challenges Ahead of Earnings Report

Technical Analysis

Wolfspeed’s stock (WOLF) surged 23.89% on May 2, 2025, closing at $4.46, after hitting an intraday high of $4.78 and a low of $3.88. The volume of 79.37 million far exceeded its average of 26.35 million shares, signaling strong buying interest and high volatility. The 14-day RSI is at 79, reflecting an overbought condition that may presage a short-term pullback or consolidation. The stock is trading above its 50-day moving average ($4.28) but significantly below the 200-day average ($8.73), illustrating a pronounced longer-term downtrend. The MACD remains negative at -0.61, indicating that momentum remains subdued despite the recent price surge. Key technical support is near $4.13 with resistance around $5.12. A stop-loss level near $4.31 is appropriate for risk management given current volatility and price action.

For the next trading day (May 5, 2025), elevated volume and RSI suggest potential for profit-taking or sideways movement. However, the recent rally and momentum from news catalysts leave room for near-term continuation above $4.50, potentially testing $5 resistance. Over the coming week, with earnings announcement slated for May 8, expect heightened volatility. The stock may experience a shakeout or retest of support ahead of earnings, followed by directional movement based on reported results and guidance.

Fundamental Analysis

Wolfspeed’s market capitalization stands at $694 million, characterizing it as a small-cap entity vulnerable to greater operational and market risks. The trailing twelve months (TTM) earnings per share is deeply negative at -$7.69, resulting in an unmeaningful negative P/E of -0.58. This confirms the company is currently unprofitable and likely investing heavily in growth initiatives, particularly relevant in the semiconductor and silicon carbide space. Analyst consensus places a median target price at $9, more than double the current price, implying significant upside potential, though tempered by risk factors. The lack of any “Sell” or “Strong Sell” ratings and presence of 6 “Buy” and 8 “Hold” ratings suggest balanced but cautious investor sentiment.

Recent management news around CFO transition may introduce uncertainty. The company is reportedly in discussions with lenders to strengthen its capital structure, suggesting potential liquidity concerns or upcoming financing needs. Such episodes can increase near-term risk.

Intrinsic value is difficult to ascertain given continued losses but on a longer-term horizon, Wolfspeed’s technological niche in silicon carbide semiconductors—critical for EVs, renewable energy, and industrial applications—supports the potential for transformational growth. Structural industry tailwinds and Wolfspeed’s capacity to scale and improve margins could justify a rising valuation over years if execution and capital stability improve.

Outlook and Long-Term Investment Potential

In the short term (next day and week), elevated volatility and overbought technical conditions pose downside risks despite bullish momentum. Earnings due on May 8 will be a key catalyst and potential inflection point. A positive report and clear capital structure strategy could reaccelerate gains and validate the bullish analyst outlook.

Over the long term, Wolfspeed’s exposure to critical growth sectors and advanced semiconductor materials places it in a strategically appealing position. Nevertheless, persistent operating losses, capital structure challenges, and high volatility require a tolerance for risk and a multi-year investment horizon.

Overall Evaluation

Wolfspeed fits a ‘Hold’ category based on the current risk/reward profile. The recent price surge and strong fundamental growth prospects support upside potential, but significant near-term uncertainties from earnings, a weak earnings record, and capital structure warrants caution. Investors are positioned to benefit from longer-term secular trends but should prepare for possible volatility and intermittent pullbacks before sustained recovery.