SanDisk stock falls 5% after Citron Research short call

Investing.com --SanDiskshares fell Tuesday after short-seller Citron Research announced a short position in the memory chip maker. The stock, which has surged 175% this year and over 1,200% in the past twelve months, dropped 5% following Citrons announcement.

Citron Research cited concerns about cyclical pressures in the memory market and intensifying competition fromSamsung. Citron is Short $SNDK They Dont Ring a Bell at the Top. We dont need Anthropic to announce theyre making NAND. Samsung is already the 800-pound gorilla, and theyve been running this playbook for 30 years, the firm commented.

The short-seller pointed toWestern Digitals recent sale of a significant portion of itsSanDiskholdings at prices 25% lower than current levels as a warning sign. Citron argued that the market is pricing SanDisk like NVIDIA, but noted a key difference: NVIDIA has a moat. SanDisk sells a commodity.

Citron highlighted Samsungs historical strategy of prioritizing market share over margins during memory cycles, referencing similar patterns in 2008, 2012, and 2018. The firm noted Samsungs recent announcement that it wont sell products under 50% margins and is moving premium chips into the same SSD market where SanDisk operates.

With double the capacity of the 2018 peak waiting in the wings, this shortage is a supply mirage that can vanish in a single earnings call, Citron commented, suggesting current supply constraints are temporary.
The firm concluded: Shorting $SNDK is skating to where the puck is going. By the time the cycle normalizes, this stock will already be much lower.