What happened
Wolfspeed (WOLF 5.55%) stock is plummeting Thursday after the company published results for its fiscal fourth quarter, which ended June 25. The semiconductor specialist's share price was down 18.7% as of 10:30 a.m. ET, according to data from S&P Global Market Intelligence.
Wolfspeed published its Q4 results after the market closed yesterday, recording mixed results in the period. The company posted a non-GAAP (adjusted) per-share loss of $0.42 on revenue of $235.8 million, while the average analyst estimate had called for a loss per share of $0.20 on sales of $222.7 million. In addition to the wider-than-expected loss, Wolfspeed also announced forward guidance that spooked Wall Street.
So what
Wolfspeed's revenue grew 3.2% year over year in its fourth fiscal quarter and beat the market's expectations, but the business's loss came in significantly wider than expected in the period. The semiconductor specialist's adjusted gross margin fell from 36.5% in Q4 last year to 29%, and its loss per diluted share expanded significantly from the $0.21 loss it posted in the previous year's quarter. The big margin decline is at least partially due to accounting changes.
The company closed out its recently completed fiscal year with sales of $921.9 million and an adjusted loss of $1.45 per diluted share. For comparison, the business posted revenue of $746.2 million and an adjusted loss of $0.96 per share in its previous fiscal year.
Now what
Wolfspeed is guiding for sales to come in between $220 million and $240 million in the first quarter of its current fiscal year. Management expects the business to record an adjusted loss between $75 million and $94 million in the period -- working out to a per-share loss between $0.60 per share and $0.75 per share. Meanwhile, the average analyst estimate had targeted a per-share loss of $0.28 on revenue of roughly $234 million.
Given that Wolfspeed posted sales of $241.3 million last year, the midpoint of its current guidance range suggests that revenue could be on track to decline roughly 4.7% year over year. Guidance also suggests that the business's loss will expand dramatically compared to the adjusted loss of $0.04 per share that it posted in last year's first quarter.
Wolfspeed is making moves to ramp up its production capacity, so it's not shocking to see the business's losses expanding. But with sales projected to dip in Q1 and margins contracting recently, it's also not surprising that the market is feeling more bearish about the stock.
