SNDK Shares Slip On Citron Note: ‘Nvidia Has A Moat. SanDisk Sells A Commodity’

• The firm noted cyclical pressures in the memory market that SanDisk primarily operates in, adding that Samsung was already leading the way in the segment. 
• Citron also highlighted the fact that long-time investor Western Digital had recently sold a part of its shares in SanDisk, which the company plans to use to service debt. 
• The firm said that it believes the sale is because WDC is cued in on the waning memory market cycle.

Shares of Sandisk slid over 2% on Tuesday after Citron Research said it is shorting the company’s shares.

The firm took a dig at Anthropic’s releases that led to a selloff in multiple technology companies since Friday, adding that it did not need the artificial intelligence company to announce its foray into NAND flash memory for it to short Sandisk Corp. (SNDK).

“The market is pricing SanDisk like it's $NVDA. There's one problem: NVIDIA has a moat. SanDisk sells a commodity,” Citron said in a post on X on Tuesday.

Headquartered in Milpitas, California, SanDisk primarily sells a range of flash memory-based data storage products.

Cyclical Pressures

Citron Research noted cyclical pressures in the memory market that SanDisk primarily operates in, adding that Samsung was already leading the way in the segment.

"Samsung is already the 800-pound gorilla, and they’ve been running this playbook for 30 years," the firm said, adding that Samsung Electronics has a track record of prioritizing market share over margins, waiting until pure-play players like SanDisk become profitable, then ramping supply and squeezing pricing.

This time, the threat may be greater, Citron said, citing a report where Samsung signaled it won’t sell below 50% margins while shifting its most advanced chips into the premium SSD segment.

WDC Sale

Citron also highlighted the fact that long-time investor Western Digital (WDC) had recently sold a part of its shares in SanDisk, which the company plans to use to service debt. The firm said that it believes the sale is because WDC is cued in on the waning memory market cycle.

“While TV pundits pound the table herding retail into cattle cars, Western Digital, the long time investor, sold a significant portion of its holdings days ago, 25% lower. Ask yourself why. Because they know the cycle is approaching a peak, and they're not waiting for the bell,” Citron said, adding that memory markets are cyclical, and cycles peak.

“Hockey shout-out: Shorting $SNDK is skating to where the puck is going. By the time the cycle normalizes, this stock will already be much lower,” Citron said.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around SNDK shares were in the ‘bearish’ territory over the past 24 hours amid ‘low’ message volumes.

One bullish user on the platform noted that Samsung has been more profitable from its high-bandwidth memory chips for Nvidia than its flash memory products.

Shares of SNDK have surged nearly 40% in the past month.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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