WOLF Should I Buy
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Wolfspeed Inc (WOLF) is not a strong buy at the moment for a beginner investor with a long-term strategy. While there are some positive developments, such as hedge fund buying and a slight improvement in financial metrics, the company's ongoing operational challenges, negative gross margins, and declining revenue forecast suggest caution. The technical indicators also do not strongly support a buy decision, and there are no strong proprietary trading signals to act on immediately.
The MACD is positive and expanding, indicating some bullish momentum. However, the RSI is neutral at 53.253, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). The stock is trading near resistance levels (R1: 17.861, R2: 18.985), which could limit further upward movement in the short term.
Hedge funds are significantly increasing their buying activity, up 193.38% over the last quarter.
The company has reduced its debt significantly from $13.6 billion to $1.7 billion, which is a positive step for long-term stability.
Insiders are selling heavily, with a 9071.66% increase in selling activity over the last month.
The company faces significant challenges in its key EV market, with a 7% revenue decline in Q2 2026 and a negative gross margin of 46%.
Revenue forecasts for Q3 2026 are down significantly compared to the previous year, reflecting ongoing market difficulties.
In Q1 2026, revenue increased slightly by 1.08% YoY to $196.8 million. However, the company reported a net loss of $643.6 million, an EPS of -4.12, and a gross margin of -15.24%. While these metrics have improved YoY, they remain deeply negative, indicating ongoing financial struggles.
Analysts are mixed on WOLF. Piper Sandler raised the price target to $20 from $6 and maintains an Overweight rating, citing potential growth in new areas like DC power and solar energy applications. However, Susquehanna lowered the price target to $20 from $30 and maintains a Neutral rating, highlighting challenges in the EV market and only modest improvements in industrial markets.
