Wolfspeed shares plunged 59% to $1.28 on Thursday, reaching an all-time low as bankruptcy fears gripped the semiconductor market. The dramatic selloff followed reports that Wolfspeed is preparing to file for Chapter 11 bankruptcy protection within weeks, after rejecting multiple out-of-court restructuring proposals from creditors.
The company, which manufactures silicon carbide chips used in electric vehicles and industrial applications, has been struggling with mounting debt, sluggish demand, and ongoing tariff uncertainties.
The Wall Street Journal reported that Wolfspeed’s bankruptcy plan has the backing of a majority of its creditors, signalling a likely court-supervised restructuring process. Earlier this month, Wolfspeed raised doubts about its ability to continue as a going concern and issued a revenue forecast for 2026 that fell well below analyst expectations.
The company now anticipates $850 million in revenue for 2026, compared to the $958.7 million consensus, highlighting the severity of its liquidity crisis.
The stock’s historic collapse triggered a frenzy in the options market. Unusual options activity was observed, with put options dominating trading volumes. On May 9, put options accounted for over 76% of total options transactions, and the put/call ratio soared to 1.79, reflecting overwhelming bearish sentiment among traders.
Many options traders who bet against Wolfspeed’s stock have reaped substantial profits as the share price collapsed. Contracts with strike prices as low as $3.00 saw heavy volume and significant gains, as the stock fell far below those levels.
Wolfspeed’s market capitalisation has now shrunk to under $200 million, a stark contrast to its year-high of $30.86 per share. The company’s rapid decline underscores the risks facing semiconductor firms exposed to cyclical demand and heavy capital requirements.
As bankruptcy proceedings loom, investors and creditors alike are bracing for further volatility, while options traders continue to capitalise on the turmoil.
