Why Wolfspeed Stock Skyrocketed Today

Wolfspeed (NYSE: WOLF) stock posted explosive gains in Friday's trading. The company's share price ended the day's trading up 31% and had been up as much as 35.4% earlier in the daily session.

Wolfspeed stock gained ground in conjunction with news about the compensation for executive chairman Thomas Werner and filings with the Securities and Exchange Commission (SEC) showing that insiders had recently acquired shares. In addition to these catalysts, the company's share price also appears to have benefited from a surge of bullish momentum for meme stocks.

Wolfspeed insiders are building positions in the stock

Earlier this week, Wolfspeed announced that its CEO, Gregg Lowe, would be stepping back from the role this month and also departing from the company's board of directors. In conjunction with the announcement, the company stated that board chairman Thomas Werner would also step into the executive chairman role as the tech specialist works to select its next CEO.

In a filing with the SEC yesterday, details about Werner's compensation as executive chairman were shared. Werner is scheduled to receive $150,000 in cash on a monthly basis in addition to $250,000 worth of restricted stock units. The executive chairman acquired 37,500 shares on Nov. 20.

In addition to details about Werner's pay package and acquisition filing, filings with the SEC also showed that other members of the company's board of directors had acquired significant amounts of stock the same day. Board member Duy-Loan T. Le acquired 20,000 shares on Nov. 20. Meanwhile, Darren Jackson acquired 36,795 shares, and Stacy Smith acquired 30,376 shares.

What's next for Wolfspeed stock?

With board members moving to acquire shares and receiving stock as a substantial component of their compensation packages, investors are seeing signs that company insiders are bullish on Wolfspeed's future. As famous investor Peter Lynch once said, "Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise." Recent share acquisitions by board members are a positive indicator for the shareholder base at large.

On the other hand, Wolfspeed's explosive stock growth also appears to have been aided by a broader rally for meme stocks. Even after today's big pop, the company's share price is still down 81% year to date. While the stock could continue to enjoy a comeback rally in the near term, there hasn't been any news about the core business to propel the recent rally -- and that opens the door for volatile trading if more substantive bullish catalysts aren't forthcoming.

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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.