Although Wolfspeed's EV business remains a bright spot and key growth driver, with an increasing number of manufacturers adopting its SiC powertrain solutions across their vehicle models, the company's overall performance has fallen well below previous guidance, which helps explain the poor stock price performance.

In the company's fiscal 2025 first quarter (for the period ended Sept. 29), Wolfspeed reported a 1% decline in total revenue alongside a larger operating loss based on heavy spending toward facilities construction. The company is pointing to $11 billion in design wins as a key performance metric reflecting the operating backlog and ongoing optimism in long-term fundamentals.

That being said, it appears the market is skeptical of company targets. According to Wall Street analysts, Wolfspeed is expected to post a 2.2% revenue decline and a wider loss in 2025 compared to last year, as gains from its new 200mm SiC production facility will be offset by the closure of its 150mm manufacturing plant.

For 2026, the trends look better with revenue estimated to reach $1.2 billion, representing a 49% growth rate while another year of negative earnings per share (EPS) at least begins to narrow, setting up a stronger latter half of the decade as part of the stock's bullish case.

Data source: Yahoo Finance. YOY = year over year.

Wolfspeed shares are trading near their 52-week low, with a forward price-to-sales (P/S) ratio of approximately 1. Investors who believe in the company's ability to execute its long-term growth strategy might view the current stock price as an attractive entry point for establishing a small position, anticipating a potential recovery.

I'm less optimistic and see little reason to buy the stock with conviction given the lingering uncertainties. My prediction is that Wolfspeed's stock will stay volatile until there is evidence of improving demand and accelerating growth. Ultimately, I believe there are better opportunities elsewhere in the stock market for investors.

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Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wolfspeed. The Motley Fool has a disclosure policy.

Is Wolfspeed Stock a Buy Now? was originally published by The Motley Fool