Shares of Wolfspeed (NYSE:WOLF) tanked 52% last Friday amid speculation that the semiconductor technology company was in danger of losing $1.5B in CHIPS Act funding due to government spending cutbacks.

The stock rebounded 18% on Monday, but retreated 8% on Tuesday. The shares were down 56% year-to-date as of Wednesday afternoon. 

So what's next for Wolfspeed (NYSE:WOLF)? We asked Seeking Alpha analysts Josh Arnold and Robbert Broens of The Value Investor for their take on the situation. 

Josh Arnold: Wolfspeed (NYSE:WOLF) was clobbered on funding fears, which I see as well-founded. With the company burning through cash very quickly, but also losing more than 50 cents for every dollar of revenue, there doesn't seem to be a reasonable path forward.

Bankruptcy risk looks very high with the amount of debt the company has, whether the funding from the US government comes through or not. Should it come, that would simply delay the inevitable, as Wolfspeed (WOLF) is not competitive. Projected revenue expansion hasn’t materialized, and Wolfspeed (WOLF) is a very long way from being able to fund itself.

Possible share sales to prop up the balance sheet are in the cards now, as operations and debt are non-starters today. There remains a significant risk that the stock goes to zero, and that risk has risen in the past week on negative news flow.

Robbert Broens: Wolfspeed's (WOLF) shares have lost again half of their value, despite news of an incoming CEO by the name of Robert Feurle and the receipt of $192M in cash tax refunds. The news was overshadowed by reports that the company had lost access to CHIPS Act funding, with the act becoming a victim of the Trump administration's efforts to freeze federal spending. This comes after the company announced positive news about CHIPS Act funding last fall, which was crucial to covering cash outflows and, in fact, the very survival of the business.

With the business sticking to its non-inspiring revenue outlook, the situation continues to get more dire by the day for common equity holders, as all strategic and financial options appear on the table, with likely a poor outcome for common equity holders.

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