Wolfspeed (WOLF) Stock Soars 1,100% On Chapter 11 Bankruptcy Update

Wolfspeed Inc (NYSE: WOLF) shares are surging Monday afternoon after the company announced a reorganization plan, with shareholders receiving substituted new common stock. The stock surged as much as 1,450% following news of its Chapter 11 restructuring and corporate changes. Here’s what investors need to know.

What To Know: Wolfspeed’s court-approved plan will slash its debt by 70%, from $6.5 billion to $2 billion, and cut interest payments by about 60%. As part of the process, Wolfspeed will reincorporate from North Carolina to Delaware.

In connection with these changes, the New York Stock Exchange suspended trading of the “old” Wolfspeed common stock on Monday. Wolfspeed’s “old” common stock is set to be delisted on Oct. 10.

Shareholders will receive new common stock in the reorganized company. However, the restructuring involves significant dilution, with current shareholders set to receive only 3-5% of the new equity as creditors take majority ownership.

The massive debt reduction sparked speculative trading, fueling the dramatic price surge amid several trading halts Monday morning.

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WOLF Price Action: Wolfspeed shares are up approximately 1,137% at $14.97 at the time of publication Monday, according to Benzinga Pro.

How To Buy WOLF Stock

By now you’re likely curious about how to participate in the market for Wolfspeed – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.

If you’re looking to bet against a company, the process is more complex. You’ll need access to an options trading platform, or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

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