Why Did Wolfspeed Stock (WOLF) Skyrocket 86.4% This Week?

Key Points

• A bankruptcy court approved Wolfspeed's plan, clearing a path to exit Chapter 11 within weeks and slashing its debt.

• Despite balance-sheet relief, execution challenges, and a pressured EV end market, the turnaround remains high-risk.

• 10 stocks we like better than Wolfspeed ›

Shares of Wolfspeed (NYSE: WOLF) skyrocketed this week, finishing up 86.4%. The rise comes as the S&P 500 and Nasdaq-100 gained 1.6% and 1.9%, respectively.

The embattled chipmaker's stock jumped this week after the company announced that its reorganization plan received bankruptcy court approval.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Court approval clears path to exit Chapter 11

Wolfspeed announced early in the week that it plans to exit Chapter 11 protection "in the next several weeks." The court approval paves the way for Wolfspeed to slash its debt burden by a massive 70%.

The bankruptcy process began in June when Wolfspeed disclosed a restructuring agreement to eliminate about $4.6 billion in debt and cut interest payments by 60%. The company formally filed for Chapter 11 on June 30.

Image source: Getty Images.

The fact that the company is not only on track but has also been able to reduce its debt by more than its original target sent shares flying.

Lighter debt but heavy execution risk

While the debt reduction is substantial, Wolfspeed's fundamental business challenges remain largely intact. The company has struggled with execution issues, and the primary market for its specialty chips, the electric vehicle (EV) market, is experiencing its own difficulties.

With the debt in a much more manageable position, Wolfspeed has a chance to execute on a turnaround, and for investors with a high risk tolerance, this could be an interesting turnaround play. I am still skeptical that the company can gain and protect meaningful market share, and I'm not confident that it will be able to turn the ship; a bankruptcy emergence doesn't guarantee a turnaround.

Should you invest $1,000 in Wolfspeed right now?

Before you buy stock in Wolfspeed, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wolfspeed wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $649,037!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,086,028!*

Now, it’s worth noting Stock Advisor’s total average return is 1,056% — a market-crushing outperformance compared to 188% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 8, 2025

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Wolfspeed. The Motley Fool has a disclosure policy.