Shares of Wolfspeed (WOLF -26.18%) are crashing on Friday. The chipmaker’s stock plunged 25.8% as of 3:32 p.m. ET and was down as much as 29.3% earlier in the day. The steep decline comes as the S&P 500 (^GSPC -0.07%) and Nasdaq Composite (^IXIC 0.00%) were pretty much flat.
The company reported somewhat positive third-quarter results, but issued a 2026 revenue forecast that fell well short of Wall Street’s expectations.
Weak guidance spooks investors
Wolfspeed reported Q3 2025 revenue of $185.4 million, slightly missing the estimated $185.9 million. The company did manage to beat Wall Street’s target for earnings, however, reporting a net loss of $0.72 per share when a loss of $0.82 per share was expected.
While its Q3 results showed some positive signs, including the smallest loss in a year, the dominant story was the company’s exceptionally weak guidance for its next fiscal year. Wolfspeed now expects sales of $850 million in 2026, when $958.7 million was expected.
The company pointed to slower-than-expected adoption of its silicon carbide chips — more energy efficient than their silicon analogs — in the EV market. The downstream effects of President Trump’s tariffs are negatively impacting the American-based chipmaker.
Image source: Getty Images.
Is Wolfspeed a buy?
There is also major uncertainty in its access to capital, something of dire importance to the heavily leveraged company. The company was set to receive $750 million in federal funding for its plant in North Carolina under the Biden administration’s CHIPS Act, but the Trump administration has called on lawmakers to repeal the federal funding, casting doubt on whether Wolfspeed will receive the money.
The company does have interesting technology, but with all the issues it currently faces, I would stay away from Wolfspeed stock.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wolfspeed. The Motley Fool has a disclosure policy.
