Why is Wolfspeed stock rising today?

shares Wolfspeed (NYSE: WOLF) They are witnessing huge gains in Wednesday trading. The specialty silicon carbide company’s stock price rose 25% as of 1pm EST today on the back of a 1.5% gain for the company’s stock. Standard & Poor’s 500 The index and a 2% rise for Nasdaq Composite index.

Wolfspeed is rising today on news of fundraising and CHIPS Act announcement from the company. The stock is also receiving a boost from the latest inflation report from the Bureau of Labor Statistics (BLS).

Wolfspeed published a press release today announcing that it has raised approximately $200 million through new stock sales. The company sold approximately 27.79 million shares of common stock and will use the proceeds to strengthen its capital structure, reduce leverage, and address outstanding maturities on its balance sheet.

Now that the stock sale has been completed, Wolfspeed says it is a step closer to receiving its funding through the CHIPS Act. While the company ended the reported fourth quarter with $1.7 billion in cash and investments, it posted significant losses and ended the period with $3 billion in long-term debt and $3.1 billion in long-term liabilities. CHIPS Act financing should give the company some necessary financial flexibility.

The stock is also rising on bullish macroeconomic news. The latest CPI report showed that core inflation reached 3.2% in December, below the 3.3% level targeted by economists’ average estimates. The report eased concerns surrounding inflation and increases the likelihood that the Federal Reserve will continue to cut interest rates this year.

Despite today’s massive gains, Wolfspeed stock is still down 82% over the past year. The semiconductor company has struggled with weak demand for electric vehicles and the cancellation of planned expansion initiatives. The silicon carbide specialist is also still in the process of finding its next CEO.

In another press release published today, Wolfspeed announced that it will publish results for the second quarter of its current fiscal year on January 29. The company will also host a conference call to discuss results, business operations and future initiatives.

Investors will get an in-depth look at the state of the business through the upcoming quarterly report, and the company may share details about leadership transition plans and future growth initiatives.

In the wake of the stock’s sell-off, Wolfspeed could have significant rebound potential — but the company will need to show it has a feasible path to improving its margins.

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