Wolfspeed Stock Plunges On Uncertainty Over CHIPS Act Funding, Goldman Sachs Cuts Price Target: Retail Spirits Remain High

Shares of Wolfspeed Inc. (WOLF) plunged almost 8% in Tuesday’s regular trading session amid growing uncertainty around the company receiving CHIPS Act funding.

Adding to investor woes, Goldman Sachs analysts cut their price target for Wolfspeed, According to The Fly.

The brokerage nearly halved its price target for Wolfspeed to $8 from $15, but the implied upside is still at an impressive 184%.

This comes at a time when the Commerce Secretary Howard Lutnick hinted at the possibility of withholding CHIPS Act funding. According to a Bloomberg report, Lutnick instead wants to push companies to set up or expand manufacturing facilities in the U.S.

On its part, Wolfspeed recently said it can execute its operating plan without any federal funding under the CHIPS Act.

Despite this, Goldman Sachs said it’s cutting the price target due to funding uncertainty adversely impacting Wolfspeed’s growth prospects.

It assigns a price-to-earnings multiple of 10 now instead of 17.5.

Earlier last week, Wolfspeed announced a new CEO, with Robert Feurle taking over from Thomas Werner. The company also received $192.1 million in cash tax refunds.

It also reaffirmed its projection of a loss of $0.76 to $0.88 per share on revenue of $170 million to $200 million.

During its second-quarter results, Wolfspeed had expressed optimism that it made “significant progress” in securing CHIPS Act funding, helped by a $200 million equity offering. However, Lutnick’s comments might have just thrown a wrench in Wolfspeed’s plans.

Retail sentiment on Stocktwits around Wolfspeed remained high, hovering in the ‘extremely bullish’ territory at the time of writing.

Not everyone shared the optimism, though, with one user speculating that Wolfspeed could be wound up at current pace.

Data from Koyfin shows the average price target for Wolfspeed is $7.90, implying a 180% upside from current levels.

Of the 15 analyst calls, there are three ‘Strong Buy’ recommendations, nine ‘Hold’ ratings, and three brokerages recommending ‘Sell’ or ‘Strong Sell.’

Wolfspeed’s stock has tumbled by nearly 54% in the past five trading sessions, with its year-to-date decline being 58%.

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