Wolfspeed aims for stability through company relocation

Wolfspeed shares drew attention on Friday as the semiconductor company announced plans to relocate its headquarters from North Carolina to Delaware by September 29. The move is part of a broader restructuring plan that the company is pushing forward despite Chapter 11 bankruptcy. In recent weeks, Wolfspeed's stock price has steadily weakened and is currently about 60% below its peak on September 16. The decision to relocate to Delaware could offer Wolfspeed more flexibility in administrative and legal matters, which might be advantageous during the current bankruptcy phase. Delaware's corporate laws are considered particularly favorable for restructuring measures and could be beneficial for future investments from institutional capital and strategic partners. Although this step does not solve the financial challenges, it signals the company's intention to stabilize its business and possibly emerge stronger from bankruptcy. Nevertheless, Wolfspeed shares remain speculative. The company continues to struggle with bankruptcy proceedings and has not yet outlined a clear path to profitability. The company's core area, power semiconductors, faces strong competition. Additionally, there is a risk that shareholders may have to accept losses during the restructuring process, where creditors might be prioritized. Although the relocation promises an improvement in governance, it alone has no impact on the high cash burn and operational challenges. However, Wall Street analysts still see considerable potential for the stock in the next twelve months. Despite the risks, they forecast a possible 200% price growth, with a median price target of $3.75, while the consensus for the stock remains “Hold.”