Wolfspeed Inc. (NYSE: WOLF) saw its shares plummet 8.50% in after-hours trading on Wednesday following the release of its fiscal first-quarter earnings report and disappointing forward guidance. The semiconductor company, which specializes in silicon carbide and gallium nitride technologies, faced a mixed quarter with some bright spots overshadowed by ongoing challenges.

For Q1, Wolfspeed reported revenue of $196.8 million, slightly missing analyst estimates of $198.5 million but showing a marginal increase from the same period last year. The company's adjusted earnings per share came in at a loss of $0.55, beating the expected loss of $0.64. However, the adjusted gross margin was deeply negative at -26.0%, reflecting significant underutilization costs from its Mohawk Valley and Siler City fabs.

The after-hours sell-off was primarily driven by Wolfspeed's weak outlook for the second quarter and beyond. The company expects Q2 revenue to be between $150 million and $190 million, potentially indicating a sequential decline. Moreover, Wolfspeed acknowledged ongoing softness in the market, which it anticipates will persist through fiscal 2026. This prolonged weakness has led the company to delay updating its long-term guidance until mid-2026. Adding to investor concerns, Wolfspeed reported a substantial GAAP loss of $4.12 per share, largely due to $504 million in reorganization items related to its recent Chapter 11 proceedings. Despite these challenges, the company maintains a strong cash position with $926 million in cash and investments, providing some financial stability as it navigates through this difficult period.