Shares of silicon carbide power module-maker Wolfspeed (NYSE: WOLF) tumbled 15.2% through 11:40 a.m. ET Thursday after missing badly on its earnings report last night.
Heading into its fiscal Q4 2026 report, analysts already weren't optimistic, expecting Wolfspeed to lose $0.52 per share on sales of $223.6 million, but the news was actually much worse. Wolfspeed lost $2.26 per share — four times as bad as expected — and its sales were only $149.6 million.
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Revenue plunged 24% year over year, with negative gross profit margins "earned" on those sales. (In fact, the negativity of the margin increased to 25%, meaning for every $1 in sales Wolfspeed booked, it lost $1.25 –before subtracting operating costs).
The good news is that this was a better result than Wolfspeed booked a year ago. The bad news is that it still left Wolfspeed with a big net loss — actually $2.81 per share when calculated under generally accepted accounting principles (GAAP), worse than the pro forma loss of $2.26.
Wolfspeed is betting on the artificial intelligence revolution to turn its fortunes around, noting that "AI data center revenue more than doubled year-over-year" for all of fiscal 2026, and gained strength as the year progressed, growing 20% sequentially in Q4. Management's guidance for about $150 million in revenue in fiscal Q1 2027, however, is almost exactly flat against Q4 2026 results — suggesting that this acceleration has now stopped cold.
Indeed, analysts who follow the stock think this year's revenue will be even worse than last year's — which were worse than the year for that, which were worse than the year before that, which were worse than the year before that!
Things aren't looking great for investors in Wolfspeed. Selling today might be the right call.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Wolfspeed. The Motley Fool has a disclosure policy.
Why Wolfspeed Stock Crashed Today was originally published by The Motley Fool