Shares of Wolfspeed (NYSE: WOLF) were rocketing higher today, up 15.1% as of 2:26 p.m. ET.
The big move higher follows a massive 31% move on Friday, continuing a vicious bounce off of the company’s recent lows. Still, Wolfspeed’s stock was down over 80% on the year entering the day, showing just how far this once-highly touted chip stock had fallen.
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Still, today saw more good news, with another insider disclosing an open-market purchase after several board members disclosed share purchases last Friday. Additionally, California Gov. Gavin Newsom provided relief for the electric vehicle (EV) sector and its suppliers, Wolfspeed included.
While a bunch of insider buys were disclosed last Friday, another was disclosed Monday. According to a filing, Wolfspeed director Glenda Dorchak purchased 3,592 shares on Friday, Nov. 22, at an average price of $8.33 per share. While that was a smaller buy than those from other insiders disclosed last Thursday, the additional purchase even as the stock rocketed higher Friday was another encouraging sign.
Wolfspeed recently changed its CEO, with Gregg Lowe stepping down and board member Thomas Werner stepping into the executive chairman role to run the company in conjunction with top management, while the company seeks a CEO replacement. That doesn’t seem like a very stable situation, so perhaps the insider buys were meant to quell market fears.
Besides flailing execution and poor results amid an electric vehicle downturn, Wolfspeed stock has also been plagued more recently by the election of Donald Trump. Post-election, investors have feared the $7,500 electric vehicle tax credit extended as part of the Inflation Reduction Act will be repealed.
But on Monday, California Gov. Gavin Newsom announced California would “intervene” if the Federal government repealed the EV tax credit. That likely means California, the largest U.S. state and EV market, would likely replace the tax credit on its own to some extent. The money for the credit would come from California’s Greenhouse Gas Reduction Fund, which polluters fund by paying for credits under the state’s cap-and-trade program, according to Newsom.
That news boosted all EV-related stocks today, including Wolfspeed, which aims to supply silicon carbide chips to EV makers in the future.
Any stock down 80%-plus has lots of rebound potential, Wolfspeed included, should the company get its act together. The company has taken on lots of debt to spend billions on building new state-of-the-art silicon carbide manufacturing plants; however, amid the electric vehicle downturn and some execution issues, Wolfspeed hasn’t seen any revenue or profit growth from all that spending yet.
