Shares of silicon carbide chipmaker Wolfspeed surged 26.9% on Monday, continuing a rally following cautious optimism about recovering end markets as earnings season begins, despite no specific news before their May 8 earnings report. With a high short interest of 41%, many short sellers may have closed positions, contributing to a “short squeeze.” However, despite recent gains, Wolfspeed remains heavily indebted, faces uncertainty with a new CEO starting May 1, and is at risk of not receiving promised CHIPS Act funding, making other automotive chip stocks less risky options for investors.
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