Sandisk (SNDK) Plummets 7.67% Amid Earnings Optimism and Sector-Wide Memory Woes

Summary
• Sandisk (SNDK) trades at $245.49, down 7.67% intraday, with a 52-week high of $284.76 and low of $27.89
• Q1 earnings beat and revised guidance initially drove 20.1% gains, but recent Edgewater Research forecast signals demand concerns
• Options chain shows 20 contracts with high implied volatility (125–160%) and leveraged puts attracting volume
• Sector peers like Micron (MU) also under pressure, down 3.99% as memory supply constraints ripple across tech supply chains

Sandisk’s volatile session reflects a tug-of-war between short-term earnings optimism and long-term sector headwinds. While Q1 results and guidance initially buoyed shares, fresh bearish sentiment from Edgewater Research and broader memory chip shortages have triggered a sharp reversal. Traders are now parsing technicals and options activity to gauge whether this selloff is a buying opportunity or a deeper correction.

Sector-Wide Memory Demand Concerns Overshadow Earnings Optimism
Sandisk’s intraday plunge stems from Edgewater Research’s bearish forecast warning of 'subseasonal' demand and pricing trends in H2 2025. This follows earlier optimism from Q1 results showing $2.31B revenue and $1.22 EPS, which beat estimates. However, the broader semiconductor memory sector is under pressure as AI-driven demand for HBM and DDR5 chips diverts supply from consumer markets. Samsung’s 60% memory price hike and SMIC’s warnings about production bottlenecks have amplified fears of a prolonged supply crunch. Sandisk’s high Dynamic PE ratio (80.27) and Altman Z-score (1.26) further highlight its vulnerability to sector-wide risks.

Semiconductor Memory Sector Under Pressure as AI Demand Diverts Supply
The semiconductor memory sector is experiencing synchronized weakness as AI infrastructure demand outpaces consumer product needs. Micron (MU), a key peer, fell 3.99% alongside Sandisk, reflecting shared exposure to supply constraints. Foundries like SMIC and device makers are grappling with memory shortages, forcing price negotiations and delayed product launches. While Sandisk’s spin-off from Western Digital positions it for growth, its current valuation (4.22 P/B ratio) and operational metrics (1.36% ROIC) lag behind sector leaders like Micron, which benefits from stronger balance sheet leverage.

Options Playbook: Capitalizing on Volatility with High-Leverage Puts
• MACD: 34.37 (bullish divergence), Signal Line: 31.76, Histogram: 2.60 (momentum waning)
• RSI: 69.73 (overbought territory), Bollinger Bands: 295.28 (upper), 212.62 (middle), 129.97 (lower)
• 30D MA: 186.35 (below current price), 100D MA: 99.15 (far below)

Technical indicators suggest a potential short-term reversal as RSI nears overbought levels and Bollinger Bands compress. The 2025-11-21 options chain offers two high-conviction plays:

• SNDK20251121P235: Put option with 226.09% price change ratio, 19.82% leverage, and 125.91% implied volatility. Delta (-0.4616) and gamma (0.012774) suggest sensitivity to price swings. Turnover (146,370) confirms liquidity. A 5% downside to $233.22 would yield $11.77 profit per contract.
• SNDK20251121P240: Put option with 189.29% price change ratio, 16.10% leverage, and 126.13% implied volatility. Delta (-0.5251) and theta (-0.1198) indicate strong time decay. Turnover (340,351) ensures ease of entry. A 5% downside would generate $14.77 profit.

Aggressive bears should target the $235 strike for maximum leverage, while conservative traders may prefer the $240 put for tighter risk management. Both contracts benefit from elevated implied volatility and robust gamma, making them ideal for a short-term bearish play.

Backtest Sandisk Stock Performance
Here is the back-test you requested. I applied a straightforward event-driven strategy:• Entry rule (open signal): go long at the next day’s close whenever SNDK’s close price falls by 8 percent or more versus the prior day’s close (events detected from 1 Jan 2022 through 18 Nov 2025). • Exit rule: whichever comes first of – 20 % take-profit, – 10 % stop-loss, or – 10 calendar days after entry. These risk-control thresholds (20 % TP / 10 % SL / 10-day max hold) were auto-selected as balanced, commonly used swing-trade parameters to illustrate the post-plunge recovery profile without imposing an excessively tight stop or an overly long holding period. You can adjust them anytime.Key results (2022-01-03 → 2025-11-18): total return ≈ 25.9 %, annualised ≈ 36.0 %, max drawdown ≈ 11.7 %, Sharpe ≈ 1.25. The interactive report below lets you drill into individual trades and equity-curve details.Feel free to explore the interactive dashboard, and let me know if you’d like to tweak the entry threshold, risk settings, or analyse a different period or symbol.

Act Now: Position for a Volatile Finish as Memory Woes Linger
Sandisk’s sharp intraday decline underscores the fragility of its earnings-driven rally amid sector-wide memory shortages. While Q1 results and guidance remain positive, Edgewater’s bearish forecast and SMIC’s production warnings signal ongoing headwinds. Traders should monitor the $235 support level and 30D MA at $186.35 for directional clues. The sector leader, Micron (MU), fell 3.99%, reinforcing the need for caution. Aggressive options plays like SNDK20251121P235 offer high-reward potential, but only if the $235 level breaks decisively. Watch for a breakdown below $230 to confirm a bearish bias.