shares Wolf speed (NYSE:WOLF) saw explosive gains in Wednesday's trading. Shares of the silicon carbide major were up 25% as of 1 p.m. ET today, while the company's shares were up 1.5%. S&P 500 Index Index rose 2% Nasdaq Composite Index index.
Wolfspeed shares are soaring today following fundraising news and the company's announcement of passage of the CHIPS Act. The stock was also boosted by the latest inflation report from the U.S. Bureau of Labor Statistics (BLS).
Wolfspeed issued a press release today announcing that it has raised approximately $200 million through a new stock offering. 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 outstanding maturities on its balance sheet.
Wolfspeed said that now that the stock sale is complete, it is one step closer to receiving funds set aside for it under the CHIPS Act. While the company ended the previous quarter with $1.7 billion in cash and investments, it posted a hefty loss and ended the quarter with $3 billion in long-term debt and $3.1 billion in long-term liabilities. CHIPS Act funding should give companies some needed financial flexibility.
The stock is also rising on positive macroeconomic news. The latest consumer price index report showed that core inflation was 3.2% in December, below the 3.3% target expected by economists. The report eased concerns about inflation and increased the likelihood that the Federal Reserve will continue to cut interest rates this year.
Despite today's explosive gains, Wolfspeed stock is still down 82% from last year. The semiconductor company has struggled as demand for electric vehicles weakens and planned expansions are scrapped. The silicon carbide specialist is still looking for its next CEO.
In a separate press release issued today, Wolfspeed announced that it will release results for the second quarter of its fiscal year on January 29. The company will also host a conference call to discuss results, business operations and future initiatives.
Investors will gain insight into the health of the company's business through its upcoming quarterly report, and the company will likely share details about its leadership transition plans and plans for future growth.
Wolfspeed may have huge rebound potential after a massive sell-off in its stock, but the company needs to prove it has a viable path to improving margins.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has an position and recommends Wolfspeed. The Motley Fool has a disclosure policy.
Why Wolfspeed Stock Is Jumping Today Originally Posted by The Motley Fool