Sandisk (SNDK) Plummets 4.25% Amid Regulatory Uncertainty and AI Storage Optimism

Summary
• Sandisk (SNDK) trades at $128.89, down 4.25% from its previous close of $134.61
• Intraday range spans $120.96 to $129.39, reflecting volatile trading
• Citi raises price target to $0.70–$0.90 for Q1 2026, but sector-wide declines pressure shares

Today’s sharp decline in Sandisk’s stock has sparked urgent analysis among traders and investors. The company’s recent partnership with Kioxia and AI-driven storage innovations have fueled optimism, yet regulatory headwinds and sector-wide weakness are amplifying short-term volatility. With the Fed’s rate decision looming and Western Digital (WDC) also down 3.05%, the storage sector faces a critical juncture.

Regulatory Jitters and Sector Weakness Overshadow AI Optimism
Sandisk’s 4.25% drop reflects a confluence of factors. The Fed’s upcoming rate decision has heightened market caution, with investors rotating out of high-growth tech stocks. Additionally, the broader storage sector is under pressure, as Western Digital (WDC) and Seagate (STX) also trade lower. While Sandisk’s recent partnership with Kioxia to expand AI storage capacity is bullish, the immediate impact of sector-wide margin compression and macroeconomic uncertainty has overwhelmed near-term optimism.

Storage Sector Suffers as Western Digital Leads Decline
The storage sector is broadly weaker, with Western Digital (WDC) down 3.05% and Seagate (STX) also underperforming. Sandisk’s decline aligns with this trend, as investors reassess valuations amid tightening credit conditions and slowing enterprise demand. The sector’s exposure to interest rate sensitivity and cyclical hardware demand makes it particularly vulnerable to macroeconomic shifts.

Bearish Options and ETFs Position for Volatility Amid Sector Weakness
• 200-day average: Empty (no historical data)
• RSI: 64.12 (neutral to overbought)
• MACD: 14.93 (bullish), Signal: 15.02 (bearish), Histogram: -0.09 (divergence)
• Bollinger Bands: Upper $140.06, Middle $112.09, Lower $84.11 (current price near upper band)

Technical indicators suggest a potential reversal after a sharp intraday rally. The RSI’s overbought level and MACD divergence signal caution, while Bollinger Bands indicate overextension. For short-term traders, bearish options and inverse ETFs could capitalize on continued sector weakness.

Top Options Contracts:
• SNDK20251024P120 (Put): Strike $120, Expiry 10/24, IV 127.35%, Leverage 18.51%, Delta -0.3286, Theta -0.2870, Gamma 0.0127, Turnover $347,703
- High IV and leverage amplify gains if SNDK drops below $120
- Moderate delta balances risk/reward for a 5% downside scenario
- Projected payoff: $10.89 (max gain if price falls to $120)
• SNDK20251024P121 (Put): Strike $121, Expiry 10/24, IV 125.42%, Leverage 17.85%, Delta -0.3412, Theta -0.2798, Gamma 0.0131, Turnover $81,720
- Slightly higher delta for faster premium decay if price drops

Aggressive bearish traders should prioritize SNDK20251024P120 for its high leverage and liquidity. If SNDK breaks below $121, SNDK20251024P121 offers a safer entry with moderate risk. Both contracts benefit from elevated IV and sector-wide weakness.

Backtest Sandisk Stock Performance
Here is the event-study back-test for “SNDK.O – close-to-close drops ≥ 4 %” from 1 Jan 2022 to 14 Oct 2025.Key take-aways (summary):• Observed only 3 qualifying events in the sample. • 1-day median return after the drop: –2.4 % (under-performing market). • Price weakness persisted for ~1 week (-9.4 % at day 7), then staged a sustained rebound; by day 20 average gain was +16.9 %. • Results are not statistically significant given the tiny event count; treat as anecdotal until more data accumulate.Open the panel on the right to explore full metrics, win-rate curves and event-aligned price paths.

Watch for Fed Decision and Sector Rotation as Key Catalysts
Sandisk’s near-term trajectory hinges on the Fed’s rate decision and broader storage sector dynamics. While the company’s AI storage partnership and Q1 guidance remain bullish, macroeconomic headwinds and sector underperformance could prolong the decline. Investors should monitor Western Digital’s (-3.05%) performance as a sector barometer. For now, bearish options and defensive positioning offer the most compelling risk/reward profile.