Wall Street Doubles Down on Wolfspeed Short Positions Over Cash Burn Fears

Wolfspeed (WOLF) has spent the last year trying to convince investors that its turnaround story is real. Its overhaul included new leadership, a reorganized go-to-market plan, and a major debt deal — all supposed to change the narrative. However, Wall Street does not appear to be buying it. Not yet, anyway.

A growing crowd of short sellers is betting the silicon carbide wafer maker still has a long way to go before it proves it can turn profitable. Let's take a closer look.

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Wolfspeed Tops List of Wall Street's Most Shorted Stocks

According to reports, Wolfspeed currently holds the top spot among heavily shorted U.S. stocks with market values above $2 billion. Almost 54% of its available shares are sold short, putting it well ahead of SoundHound AI (SOUN) and Intellia Therapeutics (NTLA).

The most shorted names on Wall Street often tend to cluster in software and biotech, which are industries known for ongoing losses, rich valuations, and heavy reliance on future growth rather than current profits. Wolfspeed, a semiconductor company, stands out from this crowd because its bear case is less about hype and more about basic math: How much cash is coming in versus how much is going out?

Wolfspeed makes silicon carbide chips and materials used in electric vehicles (EVs), industrial equipment, aerospace and, increasingly, AI data centers. According to the company, its mission is to power what it calls the "most disruptive innovations" through its silicon carbide platform.

Wolfspeed Stock Is Still Unprofitable

For the third quarter of fiscal 2026, Wolfspeed reported revenue of $150 million, which was in line with guidance according to CEO Robert Feurle. However, revenue was roughly flat compared with recent quarters, which is not a great sign for a company that needs growth to outpace its costs.

Wolfspeed reported a gross margin of -27% in Q3, wider than its -12% margin reported in the year-ago period. A negative gross margin indicates that Wolfspeed loses money on every chip it makes before we account for operating overheads. 

CFO Gregor van Issum pointed to factory underutilization — roughly $46 million worth in the quarter — as the main culprit. In Q3, adjusted EBITDA landed at -$62 million while operating cash flow was -$84 million. Management expects Q4 2026 revenue between $140 million and $160 million, with gross margin remaining negative.