Wolfspeed Stock Sees Biggest Single-Day Rally In 2 Years As $200M Stock Sale Fuels Retail Optimism

Wolfspeed’s rally marks a sharp recovery after five consecutive trading sessions of losses, during which the stock plummeted nearly 40%.

Wolfspeed Inc. (WOLF) soared over 31% in mid-day trading on Wednesday, marking its biggest single-day rally in two years. 

The surge followed the chipmaker’s completion of a previously announced at-the-market (ATM) stock offering, generating approximately $200 million in gross proceeds.

The chip maker’s stock was among the top trending tickers on Stocktwits as retail sentiment around it surged.

Wolfspeed’s rally marks a sharp recovery after five consecutive trading sessions of losses, during which the stock plummeted nearly 40%, driven by President Joe Biden’s announcement of new export restrictions targeting semiconductor sales to China.

The company intends to use the net proceeds from the ATM Program to improve its capital structure, reduce leverage, and address outstanding maturities on its balance sheet.

The funding helps Wolfspeed meet the condition of taking “addtional steps to strengthen its balance sheet” in order to receive $750 million in U.S. government grants and an additional $750 million in financing led by Apollo Global Management to support its expansion efforts, announced in October.

“With the ATM Program completed, we are now one step closer to finalizing our PMT and receiving our first funding disbursements from the CHIPS office and our other lenders,” said Executive Chairman of Wolfspeed, Tom Werner.

On Stocktwits, retail sentiment around the stock flipped into ‘extremely bullish’ territory from lows of ‘extremely bearish’ on the news. Message volume remained at ‘high’ levels.

One user highlighted buying shares at their lowest price during the recent dip.

Others encouraged holding onto the stock, anticipating further upside.

Another anticipated that the stock could cross $10 by the end of the month, ahead of the firm’s earnings report on Jan. 29. 

The stock’s surge was buoyed by core CPI numbers rising 3.2% year-over-year, slightly below the forecasted 3.3% increase. 

Lower-than-expected core inflation data has fueled speculation about potential interest rate cuts in 2025, sparking optimism across the broader market. However, traders still anticipate no changes in the Federal Reserve’s January policy meeting, with the CME FedWatch tool indicating expectations for a status quo.

Despite Wednesday's rally, Wolfspeed's stock remains under pressure. 

The stock has declined over 80% in the past year and is down 6.6% year-to-date, even after the recent rebound.

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