Wolfspeed Stock Collapses Over 34% as Bankruptcy Plan Wipes Out Equity
The silicon carbide chipmaker's Chapter 11 restructuring will cancel all existing common stock, resulting in a near-total loss for shareholders.
Shares of Wolfspeed (WOLF) plummeted more than 34% in heavy trading after the company's Chapter 11 restructuring plan was approved, confirming that all existing common stock will be cancelled. The move, which is part of a plan to emerge from bankruptcy, will effectively wipe out the value of current shareholders' investments.
The Durham, North Carolina-based company, a key player in the silicon carbide (SiC) market, saw trading volume surge to nearly 16 times the daily average as investors reacted to the news. The dramatic sell-off follows Wolfspeed's Chapter 11 filing on June 30, 2025, a decision driven by significant financial distress, declining revenue, and intense market competition.
The court-approved Plan of Reorganization is designed to slash the company's debt by approximately $4.6 billion, but it comes at the expense of equity holders. According to the plan, existing shares will be cancelled, meaning investors will not participate in the reorganized company's future. This confirmation of a near-total loss triggered the stock's collapse as the last holders exited their positions.
Wolfspeed's downfall highlights the volatility in the , which is critical for electric vehicles (EVs) and renewable energy systems. Despite being a market leader, the company struggled with intense who contributed to a steep decline in SiC wafer prices. This price war squeezed margins and exacerbated Wolfspeed's financial troubles.
While the company aims to emerge from bankruptcy by the end of the third quarter of 2025 with a healthier balance sheet, its path is uncertain. Competitors like Infineon and STMicroelectronics are poised to capture market share. For investors, the outcome is clear and severe: the , serving as a stark reminder of the risks associated with investing in financially distressed companies.