Wolfseed (NYSE: WOLF) The stock is posting big gains again during Monday’s trading. The chip specialist’s stock price was up 14.4% as of 1:30 PM ET. Meanwhile, the S&P500 index rose 0.2%, and the Nasdaq Composite index rose by 0.9%.
While there’s no company-specific news today pushing Wolfspeed stock higher, the company’s valuation is rising in tandem with meme stock momentum and a bullish backdrop to the broader market. The company’s share price is now up about 30% from the last trading week.
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Wolfspeed has attracted attention as a meme stock game in recent months. The company’s valuation then rose in late November after filings with the Securities and Exchange Commission (SEC) revealed that four members of the company’s board of directors had acquired significant amounts of stock. The chip specialist’s CEO also stepped down at a time when board members were acquiring shares, and the company has announced that it has started the process of finding a new leader for the company.
With insiders buying shares and the company still in the early stages of substantial turnaround initiatives, some investors are flocking to Wolfspeed with hopes that it will prove to be an explosive comeback stock. Even with recent gains, the company’s stock price is down about 75% this year.
Meme stocks’ momentum has been supplemented by expectations that macroeconomic and political conditions could shift in favorable directions. While the exact timeline of the Federal Reserve’s possible actions continues to be debated, many investors expect the central bank authority to continue cutting interest rates. Investors are also betting that the incoming Trump administration will bring a new round of corporate tax cuts and looser regulations. All of these dynamics could help create bullish momentum for riskier, speculative stocks.
On the other hand, investors should keep in mind that the long-term performance of Wolfspeed stock still depends on whether the company can achieve its turnaround plans. The technology specialist has recently achieved a number of important design victories, but is still in the midst of a restructuring that will see it end or significantly scale back a number of activities. Efforts to refocus core businesses on profitable silicon carbide products will likely depend on the overall demand background. in the electric vehicle, energy and industrial markets.
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Keith Noonan has no positions in the stocks mentioned. The Motley Fool holds positions in and recommends Wolfspeed. The Motley Fool has a disclosure policy.
Why Wolfspeed Stock Is Soaring Today was originally published by The Motley Fool
