"Wolfspeed sits at the crossroads of government funding, private equity backing, and explosive EV growth - a perfect storm for investors"

“Wolfspeed sits at the crossroads of government funding, private equity backing, and explosive EV growth – a perfect storm for investors”

By Karim Rahemtulla

October 28, 2024

When a powerhouse like Apollo Global Management opens its checkbook, smart investors pay attention.

That’s exactly what happened when Apollo led a $750 million investment into Wolfspeed (WOLF), the silicon carbide chip manufacturer that’s been quietly building the backbone of the EV revolution.

But this isn’t just another funding round – it’s part of a massive $2.5 billion capital injection that includes $750 million from the U.S. Department of Commerce.

Think about that for a moment: private equity giants and the U.S. government are betting big on the same horse.

And they’re not alone.

Jana Partners, the activist fund known for unlocking hidden value, has built a significant stake and is pushing for strategic changes that could unleash Wolfspeed’s true potential.

At nearly $15 per share – down from $45 just months ago – Wall Street seems to be missing what these smart money players see.

But with $27.2 billion in design-ins already secured and electric vehicle makers scrambling for silicon carbide chips, this disconnect might not last long.

Value Proposition

With a market cap of only $2 billion, Wolfspeed trades at less than 1x future sales targets. For comparison, industry peer Coherent (COHR) trades at 3x sales.

This valuation gap suggests significant upside potential as Wolfspeed executes on its growth plans.

The capital is now secured, the technology is proven, and demand is surging.

With both Apollo and Jana Partners involved, corporate actions could accelerate value creation.

Your Action Plan:

WOLF represents a rare opportunity to invest in a critical semiconductor technology at a deeply discounted price.

The combination of secured funding, activist involvement, and surging EV-driven demand creates multiple paths to value creation.

The stock’s discount to market provides a compelling risk-reward setup, especially given the company’s leading position in silicon carbide technology – a critical component for the future of electric vehicles.

In The War Room, we’ve already executed a strategic put-sell play on WOLF – the June 2025 $5 puts that offer an attractive premium while offering potential 66% upside with a whopping 70% downside cushion.

This is exactly the kind of asymmetric opportunity we look for.

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