Wolfspeed, Inc.

Wolfspeed, Inc. (NYSE: WOLF) is engaged in developing silicon carbide and gallium nitride (GaN) technologies for power and radiofrequency (RF) applications. The Company's product families include silicon carbide and GaN materials, power devices and RF devices targeted for various applications, such as electric vehicles, fast charging, 5G, renewable energy and storage, and aerospace and defense.

Recent Financial and Business Updates:

• Renesas and Wolfspeed have entered into a 10-year agreement for the supply of silicon carbide wafers. As part of the agreement, Wolfspeed has received a deposit of USD 2 billion, ensuring the availability of both 150mm and 200mm silicon carbide wafers. The supply agreement, spanning over a decade, stipulates that Wolfspeed will supply Renesas with 150mm silicon carbide bare and epitaxial wafers, with plans for scalability in the year 2025. This collaboration strengthens the partnership between the two companies and facilitates the provision of critical semiconductor materials for Renesas' operations.
• WOLF's financial performance in the third quarter of fiscal year 2023, compared to the same period in fiscal year 2022, is summarized as follows:
• The company recorded revenue of USD 228.7 million, indicating an increase from USD 188.0 million.
• The GAAP gross margin was 29.8%, which was lower than the previous year's 34.0%. The non-GAAP gross margin stood at 32.3%, down from 36.3%. WOLF incurred a GAAP net loss of USD 99.5 million, equivalent to USD 0.80 per diluted share, in contrast to a net loss of USD 66.5 million, or USD 0.54 per diluted share, in the same quarter of the previous year.
• The non-GAAP net loss amounted to USD 16.0 million, or USD 0.13 per diluted share, compared to USD 14.3 million, or USD 0.12 per diluted share, in the corresponding period last year. Additionally, the company reported design-ins of USD 1.7 billion for the quarter, contributing to year-to-date design-ins of USD 6.7 billion.
• Looking ahead to the fourth quarter of fiscal year 2023, Wolfspeed has established financial targets, projecting revenue in the range of USD 212 million to USD 232 million. The GAAP net loss is anticipated to fall between USD 98 million and USD 108 million, or USD 0.79 to USD 0.87 per diluted share. On a non-GAAP basis, the net loss is expected to range from USD 21 million to USD 29 million, or USD 0.17 to USD 0.23 per diluted share.
• Furthermore, Wolfspeed has set a revenue target between USD 1 billion and USD 1.1 billion for fiscal year 2024. This target is based on the current plan to scale up 200mm silicon carbide substrate capacity, reflecting the company's strategic growth ambitions.

Technical Observation (on the daily chart)

The price of WOLF stock has shown a consistent upward trend since making its 52-week low on May 12, 2023, with a return of approximately 45.25%. Currently, the stock is near an important resistance of USD 55.00-USD 60.00, from where price has taken resistance in the past. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction with targets of USD 70.00-USD 75.00. The RSI (14 period) momentum indicator is at a value of 59.97, with expectations of some consolidation or a short-term upward momentum. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Wolfspeed, Inc. (NYSE: WOLF) at the closing price of USD 56.74 as of July 03, 2023.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is July 03, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

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