SharkWater Trading • Semiconductors • Post-Bankruptcy Equity • Earnings
WOLF: The Loss Did Not Get Four Times Worse. The Share Count Got Three Times Smaller.
August 21, 2026
Bottom Line Up Front
Wolfspeed (NYSE: WOLF) reported fiscal Q4 2026 on Wednesday, August 19, after the close. Revenue was $149.6 million, dead on the midpoint of the company's own guidance. The adjusted loss was $2.26 per share against $0.77 a year ago, and the wires called it a four times miss. In dollars, the adjusted net loss was $116.9 million versus $119.8 million a year earlier. It got smaller.
The per share number blew out because the share count fell from 155.6 million to 51.8 million in the Chapter 11 exchange. Run last year's loss through this year's count and you get $2.31 a share, worse than what just printed. The real damage sits one line down: materials revenue fell 45 percent year over year and adjusted EBITDA deteriorated to negative $62.4 million from negative $40.7 million. The stock fell for the wrong reason and landed in roughly the right place.
What Actually Printed
Everything in this table comes out of the Q4 FY26 earnings release filed as Exhibit 99.1 on August 19, 2026, for the quarter ended June 28, 2026. Prior year figures are the predecessor entity, before fresh start accounting.
| Q4 FY26 (quarter ended 6/28/26) | Actual | Q4 FY25 |
|---|---|---|
| Revenue | $149.6M | $197.0M |
| Power products | $106.3M | $118.6M |
| Materials products | $43.3M | $78.4M |
| GAAP gross margin | -25% | -13% |
| Non-GAAP gross margin | -20% | -1% |
| GAAP net loss | -$145.4M | -$669.3M |
| GAAP loss per share | -$2.81 | -$4.30 |
| Non-GAAP net loss | -$116.9M | -$119.8M |
| Non-GAAP loss per share | -$2.26 | -$0.77 |
| Diluted weighted shares | 51,799K | 155,631K |
| Adjusted EBITDA | -$62.4M | -$40.7M |
| Operating cash flow | -$54.1M | -$242.5M |
| Free cash flow | -$60.9M | -$454.0M |
| Cash and short-term investments | $1,088.6M | $955.4M |
Source: Wolfspeed Q4 FY26 earnings release, Exhibit 99.1, August 19, 2026. Non-GAAP reconciliation tables, pages 10 through 12. Predecessor and successor periods are not directly comparable under fresh start accounting.
Guidance for Q1 FY27 is revenue of $140 million to $160 million, non-GAAP operating expenses of $62 million to $66 million, and non-GAAP gross margin that remains negative. No date attached to when it stops being negative.
The Four Times Miss Is A Denominator
Wolfspeed filed a prepackaged Chapter 11 on June 30, 2025 and emerged on September 29, 2025. The old equity was largely exchanged. Diluted weighted shares went from 155.6 million to 51.8 million, a factor of three.
Now do the arithmetic the wire services did not. Last year's adjusted net loss of $119.8 million, divided by this year's 51.8 million share count, is $2.31 per share. This quarter printed $2.26. On a constant denominator, the adjusted loss per share was slightly better than the year ago quarter.
The boat landed about the same catch it landed last August. What changed is that the crew went from a hundred and fifty-six hands to fifty-two. Everybody's share got three times bigger, and what they are splitting here is a loss.
None of this makes the quarter good. It makes the headline meaningless. And the headline is what moved 4.3 million shares.
There Is No Consensus To Miss
Here is the part that should stop you cold. Depending on which vendor you pulled the number from, Wolfspeed missed by four hundred percent, missed by fifty percent, or beat.
| Source | Q4 EPS estimate | Q4 revenue estimate | Implied verdict |
|---|---|---|---|
| Investing.com / Motley Fool | -$0.52 | $223.55M | Miss by 4x, revenue -33% |
| TipRanks (via CNN), one estimate | -$1.47 | n/a | Miss |
| TradingView / FactSet feed | -$2.45 | $150.00M | Beat by 7.8% |
| Company guidance midpoint | n/a | ~$150M | In line |
Source: secondary financial outlets and quote vendors, retrieved August 20 to 21, 2026. These figures are irreconcilable and I am not going to pretend otherwise. TipRanks explicitly labels its number "one estimate."
A $223.55 million revenue estimate against a company that guided to $140 million to $160 million and printed $150.2 million the prior quarter is not an estimate. It is a stale row in a database. The most plausible explanation is a model that never got rebuilt after the restructuring split fiscal 2026 into a successor period and a predecessor period.
Analyst coverage collapsed alongside the equity. TradingView's forecast page shows a target range of $25 to $30. One vendor shows a single covering analyst. Another still carried a $9.22 average target from pre-emergence work. TD Cowen weighed in after the print with a Hold and a $25 target, which is at least fresh.
Rule of the boat: a company that has been through fresh start accounting inside the trailing twelve months has no usable consensus, no usable trailing multiple, and no usable chart. Go to the filing. Everything else is a vendor guessing at which period to add to which.
What The Quote Page Will Tell You, And Why It Is Wrong
Pull WOLF up on the majors right now and you will find a trailing P/E of 1.33 next to a trailing EPS of positive $23.57. You will also find a trailing P/E of negative 2.39 on a different site. Both are artifacts of the same thing.
Fiscal 2026 splits into a successor period that lost $415.8 million and a ninety-one day predecessor stub that booked net income of $420.2 million. Sum them and you get positive $4.4 million of "full year net income," which several aggregators now display. That $420.2 million is not earnings. It is a $563.4 million reorganization gain from discharging debt in bankruptcy court. Nobody made $4.4 million.
The 52 week range is equally useless. Vendors variously show a low of $1.16, $8.05, or $0.39, because the low was set by a different security under the same ticker. Reported beta ranges from 3.9 to 5.4 for the same reason. Trailing anything on this name is measuring a tide gauge that got moved.
The Line That Should Have Moved The Stock
Strip out the denominator noise and there is still a genuinely bad quarter underneath, and it is not the one anybody wrote about.
Materials revenue fell from $78.4 million to $43.3 million. That is down 45 percent year over year. Power products fell 10 percent. So the collapse is concentrated almost entirely in the wafer and substrate business, which is the part of Wolfspeed that was supposed to be the moat. Wolfspeed does not have a scale advantage in devices. It has one in silicon carbide crystal growth. That is the segment that just halved.
Second, margins moved the wrong way in a period when management is selling a margin recovery story. Non-GAAP gross margin went from negative 1 percent to negative 20 percent. Adjusted EBITDA went from negative $40.7 million to negative $62.4 million, a 53 percent deterioration, in a quarter where revenue only fell 24 percent. Fixed cost absorption on two large fabs running well below capacity is doing exactly what fixed cost absorption does.
Third, and this is the one I would want explained on the next call: gross capital expenditure was $5 million in the quarter, down from $38 million the prior quarter and $210 million in the year ago quarter. Free cash flow of negative $60.9 million looks contained precisely because the company stopped building. You cannot ramp 200 millimeter capacity and spend five million dollars a quarter at the same time. One of those two facts has to give.
The Balance Sheet Is The Thing That Actually Got Fixed
| As of June 28, 2026 | Amount |
|---|---|
| Cash, equivalents and short-term investments | $1,088.6M |
| Long-term debt | $931.0M |
| Convertible notes, net | $756.5M |
| Total debt | $1,687.5M |
| Net debt | ~$599M |
| Total stockholders' equity | $930.2M |
| Q4 free cash flow burn | -$60.9M |
Source: Q4 FY26 condensed consolidated balance sheet, unaudited, and free cash flow reconciliation. Net debt is my calculation from the filed line items, not a company-reported metric.
A year ago this balance sheet carried $6.5 billion of current maturities and negative $447 million of equity. Today it carries $1.7 billion of debt against $1.1 billion of cash and $930 million of positive book equity, with management stating on the call that there are no maturities before 2030. Holders of $46 million of convertible notes voluntarily converted during the quarter.
At the fourth quarter burn rate that is roughly seventeen quarters of runway. Treat that number as a ceiling, not a plan: it assumes capex stays at five million dollars a quarter, which it will not if the business is actually going to grow.
What You Are Paying
At roughly $26 a share against 52.0 million shares outstanding, the market cap is about $1.37 billion. Add the $599 million of net debt and enterprise value is close to $1.97 billion. Against fiscal 2026 revenue of $665.1 million, that is roughly three times sales. Against the annualized fourth quarter run rate of about $598 million, closer to 3.3 times.
Three times sales for a business with negative gross margins is not obviously cheap and not obviously expensive. It is a bet on what the fabs are worth to somebody, and the honest answer is that nobody has marked them recently.
The Tape
| Date | Price | Note |
|---|---|---|
| May 22, 2026 | $80.82 | 52 week high, post-emergence |
| Aug 17, 2026 | ~$31.46 | Down 10% on the session, no company news |
| Aug 19, 2026 close | ~$29.10 | Down 7.5% into the print |
| Aug 19, 4:10pm ET | ~$29.80 | Initially up 2% on the release |
| Aug 20 intraday low | ~$24.70 | Down about 15% mid-morning |
| Aug 20 close | ~$26.00 to $26.40 | Sources disagree, see below |
Source: multiple secondary quote vendors, retrieved August 20 to 21, 2026. All prices approximate and unsettled. Thursday's official closing print does not reconcile across sources: reported one day declines range from 9.4% to 15.8%. Do not size anything off this table.
Two details in there are worth more than the rest of the table. First, the stock traded up two percent in the minutes after the release, then reversed hard once the numbers ran through the estimate engines. The selling was not a reaction to the filing. It was a reaction to a comparison.
Second, the options market had priced a 13.7 percent post-earnings move going in. The realized one day move came in under ten percent by most readings. Whoever sold that event premium got paid, which is the usual outcome and worth remembering the next time a binary looks expensive.
Bull Case
- The dollar loss did not deteriorate. Adjusted net loss of $116.9 million against $119.8 million a year ago. The entire per share blowout is the exchange ratio.
- Solvency is no longer the question. $1.09 billion of cash, $599 million of net debt, positive book equity, and no maturities before 2030 per management. A year ago this company had $6.5 billion of debt coming current.
- The data center line is compounding. AI data center revenue more than doubled across fiscal 2026 and grew about 20 percent sequentially in Q4, with the Gen 5 SiC MOSFET launched, a LITEON collaboration announced, and a memorandum of understanding with GE Aerospace. Small base, right direction.
- Management forecast its own business correctly. Revenue landed at the midpoint of guidance. For a company twelve months out of bankruptcy court with a new CEO and CFO, forecasting accuracy is a real signal.
- You are paying roughly three times sales for the largest western silicon carbide substrate producer, with two 200 millimeter fabs already built, capitalized, and described by management as production ready.
Bear Case
- The moat business halved. Materials revenue down 45 percent year over year. Devices are a competitive scrum. Crystal growth was supposed to be the defensible piece, and it is the piece that fell apart.
- Margins moved the wrong way. Non-GAAP gross margin from negative 1 percent to negative 20 percent, adjusted EBITDA 53 percent worse year over year. Guidance says gross margin stays negative next quarter, with no date attached to when it does not.
- The cash flow is flattered by a capex stop. Five million dollars of gross capital expenditure in a quarter, down from $210 million a year ago. That is not discipline at a company whose entire thesis is a 200 millimeter ramp. It is a pause.
- Dilution is structural. $756.5 million of convertible notes net, sitting above a 52 million share count with a float of roughly 34 million. $46 million already converted voluntarily in Q4. Every good outcome for the equity accelerates the conversion.
- Automotive visibility is poor by management's own account. The CEO flagged that automotive and industrial demand remains difficult to predict, including customer product mix changes. That is the volume that fills the fabs and fixes the absorption problem.
The SharkWater Take
I am not buying this and I am not shorting it, and I want to be precise about why, because the reasoning is not "it is risky."
The market sold Wolfspeed on a comparison to a number that three different vendors could not agree on, one of which scored the same print as a beat. That is a bad reason to sell a stock. But it arrived at a defensible price anyway, because underneath the noise the materials segment lost 45 percent of its revenue and the company is burning $62 million of adjusted EBITDA a quarter while spending five million dollars on capital equipment. Being right for the wrong reason is still being right. I am not going to fade a selloff just because the crowd got there sloppily.
What I would need to see is not complicated and it is not a lease or a contract or a partnership announcement. It is two consecutive quarters where materials revenue stops falling and gross capex goes back above thirty million dollars without the cash balance cratering. That combination would mean demand returned and management believed it enough to spend. Until then this is a well financed company with a shrinking moat business, and the balance sheet buys it time rather than momentum.
The tradeable observation here is not directional. It is that this ticker is a data quality trap. Anyone running a screen on trailing P/E, 52 week range, EPS surprise, or beta is screening a security that did not exist eleven months ago. If you find yourself looking at a positive 1.33 P/E on a company with negative gross margins, the screen is broken, not the market. That is worth more than a view on silicon carbide.
One more thing, on the vol. The event premium was 13.7 percent implied against a realized move under ten. Post-event implied volatility on a name like this usually stays elevated for a week or two after the catalyst has already passed, which is the single most reliably mispriced thing in the whole setup. I have not pulled the chain, so I am not putting strikes in print.
What I Could Not Reconcile
Thursday's closing price. Reported one day declines for August 20 span 9.4 percent to 15.8 percent across vendors, implying closes anywhere from $24.50 to $26.40. Every price in this post is approximate.
Consensus estimates. Four different figures, no way to adjudicate. I have shown all of them rather than picking the one that supports a narrative.
Debt maturity schedule. Management's "no maturities before 2030" comes from earnings call coverage, which is secondary. Bond listings for the outstanding paper show 2031 maturities on three issues. Consistent, but I have not read the indentures.
Gross versus net capex. The filed cash flow statement shows property and equipment spending net of incentive reimbursements. The $5 million gross figure comes from the earnings deck as reported by a secondary outlet, not from the release itself.
No options chain. I did not pull live quotes. No strikes, no premiums, no ladder in this post. The implied move figure of 13.7 percent is pre-earnings reporting, not a live read.
Triggers
The 10-K. Due within weeks of the release. That is where the segment detail, customer concentration, the full convertible note terms, and the going concern language actually live. The press release is a summary of a summary.
Materials revenue, Q1 FY27. Reports October 28, 2026. If $43.3 million goes to $35 million, the moat argument is finished and the three times sales multiple has to come down.
Gross capex. A return above thirty million dollars a quarter says management sees demand. A second quarter at five million says they do not.
Convertible note conversions. Each 8-K disclosing voluntary conversion tells you the notes are in the money and the share count is climbing. Track the count, not the price.
What invalidates the cautious read: a quarter with positive non-GAAP gross margin and stabilizing materials revenue. At that point the balance sheet stops being a life raft and starts being dry powder, and the multiple is arguably too low.
Fair winds and following seas.
Disclaimer: This post is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Financial figures are drawn from Wolfspeed's fiscal fourth quarter 2026 earnings release dated August 19, 2026 and are unaudited and subject to revision in the Form 10-K. Predecessor and successor period figures are not comparable under fresh start accounting. Share prices, market capitalization, enterprise value, net debt, and per-share restatements are approximate, are the author's calculations from filed line items rather than reported company metrics, and were retrieved from secondary vendors between August 20 and August 21, 2026. Analyst estimates cited are irreconcilable across sources and are reproduced as found. The implied move figure is pre-earnings secondary reporting, not a live options quote, and no executable option prices appear in this post. Forward-looking guidance regarding revenue, operating expenses, gross margin, and debt maturities is management's, not the author's. Wolfspeed is a recently reorganized issuer with negative gross margins, negative operating cash flow, and substantial convertible obligations, and its shares are highly volatile. Verify all figures against primary filings before acting. Past performance does not guarantee future results. Consult a licensed financial professional regarding your specific situation.
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