Wolfspeed (WOLF -20. 55%) stock is continuing to lose ground Thursday after a big sell-off in yesterday's trading. The company's price was down 19. 4% as of 2:15 p.
ET today and had been down as much as 22. 8% earlier in the session. Wolfspeed has seen incredible volatility this week.
The stock kicked off the stretch with massive gains after the company announced on Monday that it had selected Gregor van Issum as its next chief financial officer.
The news spurred an incredible surge for the stock, and the rally continued through Tuesday's trading -- but s have subsequently seen some big pullbacks. Image source: Getty Images.
Today's sell-offs aren't connected to any new developments for the company and instead appear to be a continued fit-taking reaction to the huge gains recorded across Monday's and Tuesday's sessions.
Even with some big pullbacks, the stock has still more than doubled over the last week. Should investors pounce on Wolfspeed stock.
The massive rally for Wolfspeed stock early this week appears to have been largely disconnected from the practical implications of what the company naming its next CFO means for current holders of its common stock.
The silicon-carbide specialist filed for preliminary Chapter 11 bankruptcy tections at the end of June, and the company is moving forward with a restructuring that will see its assets transferred to creditors in order to offset debt.
The restructuring will also see a new corporate entity created and grant holders of Wolfspeed stock only a small valuation slice of the new company.
Depending on how things play out, current holders will receive between 3% and 5% of the new.
This vision suggests that there is vey little chance for current holders to receive value above Wolfspeed's current price after the restructuring is.
While it's within the realm of possibility that the stock could see a short-term surge above its current pricing level, there's also a big risk that the stock will quickly plummet when s are de-listed form the New York Stock Exchange (NYSE) due to the company's bankruptcy ceedings.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wolfspeed. The Motley Fool has a disclosure policy.