Why Is Wolfspeed Stock Plummeting Today?

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Ah, Wolfspeed. One of those companies that, on paper, promises the moon but, instead of soaring majestically, ends up crashing into a very large, very inconvenient asteroid. And so, here we are, witnessing a 12.1% plunge in the stock price by 1:35 p.m. ET on Wednesday, while the S&P 500 and Nasdaq Composite-those supposedly “steady” indicators of market health-have been doing their best to cheer up the spirits of investors. How quaint.

For those who haven’t been following the saga of this beleaguered chipmaker, Wolfspeed has, after an extensive and rather theatrical period in Chapter 11, finally emerged from the bankruptcy protection cocoon. But as with all metamorphoses, there was a catch: in order to satisfy its creditors, the company decided to give its common stockholders a rather unpleasant surprise-a dilution that would make even the most hardened investor raise an eyebrow. Perhaps two eyebrows. Maybe even three, depending on your flexibility.

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Wolfspeed Gets a New Stock

Monday arrived, and with it, a fresh batch of stock certificates-though not quite in the manner one might have hoped. All previous shares were ceremoniously canceled, as if they were merely old newspapers. New stock was issued, but here’s the kicker: the vast majority of those shiny new shares were dispatched to creditors, leaving the poor souls who had held onto the old stock with a pitiful ratio of one new share for every 120 old ones. It’s the kind of ratio that makes you want to take up knitting or birdwatching instead of reading stock market news.

Buyer Beware: Dilution Will Continue

If you, like many investors, found yourself drawn to Wolfspeed’s stock last week-perhaps seduced by its apparent “bargain-bin” pricing-well, here’s the hard truth: you’ve been had. You see, buried deep within the fine print of a Form 8-K filed with the SEC, Wolfspeed revealed its grand plan for equity holders, which it described in the most understated way possible as “a significant loss on their investment.” A noble attempt at diplomacy, really. It’s akin to a chef telling you that the soup you’re about to eat may contain, among other things, “unfortunate ingredients.”

Now, let’s be clear: this isn’t some kind of “freak accident” in the stock market. This is the financial equivalent of stepping into a room where someone has just placed a very large bucket of water on top of a door, and you, dear investor, are about to open it. The situation is ongoing, and, with any luck, more shares will be issued soon, which means further dilution is imminent. How charming.

So, here’s my advice: steer clear. Let the situation settle. Once the proverbial dust settles, and the storm of dilution has passed, perhaps then-just perhaps-you might find it interesting to take another look. But until then, let the chaos unfold. There’s no rush. No rush at all.

And remember, in the world of stocks, as in life, things rarely go according to plan. But then again, that’s what makes it all so wonderfully absurd. 🧐

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2025-10-01 21:42