If You’d Invested $500 in Wolfspeed 5 Years Ago, Here’s How Much You’d Have Today

Five years back—a simple $500 bet on Wolfspeed. Today? Let's just say it's not for the faint of heart.

The Silicon Carbide specialist rode semiconductor demand through pandemic chaos and electric vehicle revolutions. Wolfspeed became the chip stock everyone watched but few understood.

From powering EVs to 5G infrastructure—their technology quietly became indispensable. While traditional investors chased FAANG stocks, Wolfspeed investors saw a different kind of acceleration.

The numbers tell the real story. That initial investment? Let's crunch what half a grand turned into after half a decade of market volatility and technological breakthroughs.

Of course, hindsight investing always looks brilliant—until you remember most Wall Street analysts can't predict next quarter, let alone five years out.

A dimming light

Across a five-year stretch, a $500 investment in what's now Wolfspeed WOULD have withered to only $16.42. This, combined with the company entering bankruptcy proceedings, has made it something of a meme stock.

Image source: Getty Images.

Wolfspeed pivoted its business in 2021, changing its name (from Cree) and eschewing the light-emitting diode (LED) products that had been its main focus since the 1993 founding.

Instead, it embraced technology based on the aforementioned materials, which promise greater efficiency and speed than conventional silicon solutions. Promise isn't fusing with reality, however, as demand in the crucial yet ultracompetitive electric vehicle (EV) components space hasn't been as strong as hoped.

The company consistently books bottom-line losses, with its generally accepted accounting principles (GAAP) net shortfall nearly quadrupling in its most recently reported quarter to $669 million from the year-ago frame's less than $175 million. Net revenue also declined, sliding to $197 million from under $201 million.

Emerging from the den of bankruptcy

One piece of good news is that, earlier this month, Wolfspeed received approval for its plan of reorganization to emerge from bankruptcy. It reached an agreement with creditors to slice outstanding debt by around 70%, or approximately $4.6 billion, leading to a roughly 60% reduction in interest payments.

The considerable downside for current stock investors is that Wolfspeed's existing equity will be eliminated, with current shareholders receiving a collective figure of merely 3% to 5% of new common stock.

So Wolfspeed's future is cloudy at best, and it hardly looks like today's investors will be tomorrow's gainers. I feel this stock is too risky for a buy just now.