Key Points
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Wolfspeed filed for Chapter 11 bankruptcy last month, creating a path forward in the face of massive debt.
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The company announced yesterday that it has appointed a new CFO to help the company navigate restructuring.
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Shares of Wolfspeed (NYSE: WOLF) are spiking on Tuesday. The chipmaker’s stock was up 11.3% as of 12:42 p.m. ET, as the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC) were relatively flat.
Wolfspeed’s stock is continuing its run-up after yesterday’s news that the company had hired a new chief financial officer (CFO) to help the troubled company through its bankruptcy.
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A new CFO, a new hope
Wolfspeed announced yesterday that effective Sept. 1, Gregor Van Issum will join the company as its new CFO. This is a critical move at an extremely delicate time for Wolfspeed. Last month, the company was forced to file for bankruptcy as its debts mounted and revenues shrank.
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Van Issum has more than 20 years of experience with strategic financing and transformation in the tech sector, which the company says aligns with its turnaround strategy. His history of effective cost-cutting and managing large merger deals in past senior leadership roles impressed investors, giving them hope that the company could effectively navigate bankruptcy and execute a turnaround.
Wolfspeed also recently named Dr. David Emerson as its chief operating officer (COO) as part of its efforts to revamp the company’s operations.
Rocky waters are ahead
While the news is positive, it is not enough. I believe this latest rally and the one that followed the company’s bankruptcy filing have a lot more to do with hype than reality. The move will help the company shed much of its debt, but the company is still facing major issues in its business that I think make Wolfspeed stock a nonstarter.
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Johnny Rice 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.
