Wolfspeed (WOLF) Stock Plunges After Explosive 77% Rally: What's Going On?

Wolfspeed Inc WOLF shares are down 15.1% to $3.50 during Tuesday’s session, paring back gains from a sharp 77% rally over the past week. The stock gained in recent sessions despite no new company-specific developments.

What To Know: Wolfspeed, a producer of silicon carbide semiconductors used in electric vehicles and industrial systems, surged in recent sessions amid broader strength in the semiconductor space and improving sentiment around the economic outlook.

Last week's rally was likely amplified by Wolfspeed's unusually high short interest. According to Benzinga Pro, roughly 64% of the company's float is sold short, which may have triggered a short squeeze—where bearish investors are forced to buy back shares as the price climbs, adding further momentum.

A short squeeze can occur when a rising stock price puts pressure on short sellers to close out their positions to limit losses. This buying activity can lead to a rapid and sometimes sharp spike in the stock’s price, creating a feedback loop of upward movement.

Additionally, looking ahead, investors are eyeing Wolfspeed's upcoming third-quarter earnings report, scheduled for release after the market closes on Thursday, May 8.

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How To Buy WOLF Stock

By now you're likely curious about how to participate in the market for Wolfspeed – be it to purchase shares, or even attempt to bet against the company.

Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share.

In the case of Wolfspeed, which is trading at $3.48 as of publishing time, $100 would buy you 28.74 shares of stock.

If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource. Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading – either way it allows you to profit off of the share price decline.

According to data from Benzinga Pro, WOLF has a 52-week high of $30.86 and a 52-week low of $2.06.