By Mackenzie Tatananni

Wolfspeed stock was set to end to its impressive run on Tuesday, a little over a week before the semiconductor manufacturer is set to report earnings.

Shares fell 2.9% to $4 after seeing a double-digit percent increase in premarket trading. The benchmark S&P 500 was up 0.1%, while the tech-heavy Nasdaq Composite rose 0.2%.

Wolfspeed closed up 26% at $4.13 on Monday, though shares traded as high as $4.22 during the session, according to Dow Jones Market Data.

One day later, the rally finally appeared to be running out of steam. The latest activity was likely the result of a short squeeze, when the price of a heavily shorted stock rises suddenly, forcing short sellers to buy back shares to cover their positions. This results in a further increase in the price.

On Wednesday, The Wall Street Journal published a story saying Wolfspeed was "the most-shorted U.S. stock," news that may have brought the potential for gains from short sellers closing out their positions to investors' attention.

Then, Raymond James released its latest semiconductor industry report on Friday. Analysts noted that Wolfspeed topped the list of stocks with the largest short-interest ratio, at 41%.

While the shares began rising on Wednesday, they saw the largest jump on Monday. After plateauing around $3.20, the stock price suddenly spiked over $4.

The newfound attention also thrusts Wolfspeed's coming earnings report into the spotlight. The company, which specializes in so-called wide bandgap semiconductors, which allow devices to operate at higher temperatures and voltages, is set to share its latest financial results on May 8..

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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April 29, 2025 10:24 ET (14:24 GMT)

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