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Investing.com -- Wolfspeed was downgraded by both JPMorgan (NYSE:JPM) and Citi to Underweight/Sell in notes Friday, citing worsening demand, macro uncertainty, and financial stress that now includes concerns over its ability to continue operating.

JPMorgan downgraded Wolfspeed (NYSE:WOLF) to Underweight following its fiscal third-quarter report, citing “ongoing headwinds for Silicon Carbide (SiC) products,” particularly in Industrial&Energy devices. 

The bank also flagged “incremental pressures in Materials” as customers delay purchases, possibly impacting ramp-up plans at the company’s JP fab.

JPMorgan warned that “complex negotiations with lenders, that now includes both in-court and out-of-court options, will further impair equity investors’ confidence.”

Citi was more direct, stating that Wolfspeed “faces significant financial challenges in a sluggish macro environment,” and that “substantial doubt about the Company’s ability to continue as a going concern” has now been added to its regulatory filings. 

The bank cut its price target for the stock to $3 from $7 and noted that the firm did not provide guidance or host callbacks during its earnings release.

Both firms pointed to leadership instability. Citi noted the board “terminated the CEO’s employment in November” and that the CFO will leave at the end of May.

JPMorgan added that “significant changes in the management team create a challenging path” to reach Wolfspeed’s goal of positive operating cash flow by fiscal 2026.

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