Disappointing Forecast Tears into Wolfspeed Stock

No fewer than five analysts added bear notes

Deputy Editor
Aug 17, 2023 at 9:14 AM
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Wolfspeed Inc (NYSE:WOLF) is down 17.9% at $44.20 premarket, following its mixed fiscal fourth-quarter report. The company announced wider-than-expected losses per share alongside better-than-anticipated revenue, but the semiconductor name's disappointing current-quarter forecast is what's really weighing. To follow, no fewer than five analysts slashed their price targets, with the lowest from BofA Global Research to $49 from $56. 

On the charts, WOLF is pacing for its third-straight weekly loss. The stock has slid since it was rejected by the $70 level in two attempts at a breakout, and if today's bear gap holds into regular trading, it will fall below June's support at the $50 level. Heading into today, the equity is down 23% year to date. 

Short interest is unwinding, down 13.5% over the past two weeks. WOLF has failed to capitalize, however, which doesn't bode well for its technical setup. Still, the 16.80 million shares sold short account for 13.6% of the stock's available float, or roughly six days of pent-up buying power. Plus, WOLF's 14-day relative strength index (RSI) sits in "oversold" territory at 27.7, which typically indicates a short-term bounce is in the cards. 

Now could be a good time to weigh in with options. The security's Schaeffer's Volatility Scorecard (SVS) sits at a 92 out of 100, meaning Wolfspeed stock has exceeded option traders' volatility expectations during the past year. 

 

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