Wolfspeed's Wild Ride: From Bankruptcy to Bullish Bets

A strategic bankruptcy filing by silicon carbide leader Wolfspeed has created a market paradox, wiping out shareholders while simultaneously fueling a speculative trading frenzy.

Semiconductor pioneer Wolfspeed, Inc. (NYSE: WOLF), a global leader in the critical silicon carbide (SiC) technology that powers electric vehicles (EVs) and renewable energy, filed for Chapter 11 bankruptcy on June 30, 2025. But this isn't a story of corporate collapse. Instead, it's a calculated financial reset designed to save a technologically superior company from its own crushing debt.   

The Financial Reset

Wolfspeed's ambitious, debt-fueled expansion into next-generation 200mm SiC manufacturing collided with a perfect storm: a slowdown in the EV market, fierce price competition, and the failure to secure anticipated U.S. government funding. The result was a liquidity crisis.   

The company's solution is a "pre-packaged" Chapter 11 bankruptcy, a strategic move negotiated with its major creditors beforehand. The plan is designed to be swift, with Wolfspeed expecting to emerge from the process by the end of the third quarter of 2025. The restructuring will slash the company's debt by approximately $4.6 billion (a 70% reduction) and cut its annual interest payments by 60%.   

However, the terms are brutal for existing stockholders. The plan dictates that all current WOLF shares will be cancelled. In exchange, shareholders will receive a meager 3% to 5% stake in the newly reorganized company, a fraction subject to further dilution. For anyone holding the common stock, this amounts to a near-total wipeout.   

A Market Divided: Puts, Calls, and "Meme Stock" Mania

The market's reaction to Wolfspeed's troubles has been a fascinating case study in contradictions.

• The "Smart Money" Bet on Collapse: In the days leading up to the first public reports of a potential bankruptcy in May 2025, the options market saw a massive surge in bearish activity. One trade stood out: a trader bought nearly 58,000 put options—contracts that profit from a price drop—for a premium of $8.8 million just before the news broke. This suggests sophisticated players had strong conviction that the company's stock was headed for a fall.   

  
  

• The Post-Filing Speculative Frenzy: Paradoxically, after the official bankruptcy filing, WOLF stock soared, at times doubling in price. This rally was fueled by a surge in call options—bets on a price increase—and appeared to be driven by a classic "meme stock" short squeeze. Speculative traders, ignoring the fundamental reality of the shareholder wipeout, piled in, creating extreme volatility completely detached from the company's actual value. On one day in July, investors purchased over 147,000 call options, a 30% increase over the daily average.   

What's Next for the "New" Wolfspeed?

When Wolfspeed emerges from bankruptcy, it will be a leaner company with a much healthier balance sheet, a new CFO specializing in turnarounds, and its world-class technology intact. However, it faces a more competitive landscape than ever, with rivals in China and established global players challenging its market position.   

For investors, the takeaway is clear: the currently traded WOLF stock is a high-risk speculative play with a near-certain outcome of significant loss upon restructuring. The real, albeit still risky, opportunity lies in the post-bankruptcy entity. The "new" Wolfspeed, freed from its debt burden, must prove it can finally achieve the operational execution and profitability that have long eluded it.