It has been about a month since the last earnings report for Wolfspeed (WOLF Quick QuoteWOLF - Free Report) . Shares have added about 11.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Wolfspeed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Wolfspeed Reports Loss in Q1 Earnings, Revenues Down Y/Y

Wolfspeed reported a first-quarter fiscal 2025 non-GAAP loss of 91 cents per share, which increased from the year-ago quarter’s loss of 53 cents per share. The figure missed the Zacks Consensus Estimate by 9.90%

Revenues of $194.7 million decreased 1.4% year over year and lagged the consensus mark by 2.71%. Mohawk Valley Fab contributed $49 million in revenues in the reported quarter.

Power Products accounted for 49.9%, while Materials Products contributed 50.1%. Power Products revenues decreased 4.1% year over year to $97.1 million. Materials Products revenues increased 1.5% year over year to $97.6 million.

Power device design-ins were $1.5 billion in the reported quarter. Quarterly design wins were $1.3 billion.

WOLF's Operating Details

In the fiscal first quarter, Wolfspeed reported a non-GAAP gross margin of 3.4%, down from 15.6% reported in the year-ago quarter. Underutilization costs of $26.4 million negatively impacted gross margin in the reported quarter.

In the reported quarter, sales, general and administrative expenses were $62.2 million (31.9% of total revenues), down 3% year over year. 

Research & development expenses (26.1% of total revenues) increased 15.4% year over year to $50.9 million.

Wolfspeed incurred $19.7 million in factory start-up costs in the first quarter of fiscal 2025.

The company incurred a non-GAAP operating loss of $113 million, wider than the operating loss of $72.3 million in the year-ago quarter.

WOLF’s Balance Sheet & Cash Flow

As of Sept. 29, 2024, WOLF had cash, cash equivalents and short-term investments of $1.68 billion compared with $2.17 billion as of June 30, 2024.

Long-term debt was $3.14 billion as of Sept. 29, 2024.

Free cash outflow was $528.2 million, comprising $132 million of operating cash outflow and $395 million of capital expenditures.

WOLF Initiates Weak 2Q25 Guidance

For second-quarter fiscal 2025, Wolfspeed expects revenues in the range of $160-$200 million. Non-GAAP loss is expected to be between $1.14 per share and $0.89 per share. 

The company expects Mohawk Valley Fab to contribute nearly $50-$70 million in revenues in the second quarter of fiscal 2025.

The company targets a non-GAAP gross margin of -6% to +6%.

Wolfspeed expects fiscal second-quarter 2025 non-GAAP operating expenses of $110 million, marking a $10 million decrease from the prior quarter and reflecting a 15% reduction from fiscal fourth-quarter 2024 due to restructuring actions and cost-saving measures.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -11.94% due to these changes.

VGM Scores

Currently, Wolfspeed has a poor Growth Score of F, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Wolfspeed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.