SanDisk (SNDK) shares have tumbled 45% from their year-to-date high, reaching $1,204 in premarket trading—the lowest level since May 1. The decline aligns with a broader selloff in memory stocks, and technical analysis based on the Wyckoff Theory indicates further downside may be ahead.
Wyckoff Theory Points to Markdown Phase
The Wyckoff Theory, which tracks asset price cycles through accumulation, markup, distribution, and markdown phases, suggests SanDisk has entered the latter two stages. After a prolonged consolidation period following its spinoff from Western Digital—interpreted as accumulation by smart money—the stock experienced a parabolic markup phase, surging to a record high of $2,355 on June 23. Now, distribution and markdown appear underway, characterized by heavy profit-taking.
Technically, the next support level is the 61.8% Fibonacci retracement at $920, roughly 27% below current prices. This aligns with the broader memory sector rout, as the DRAM ETF has dropped over 40% from its 2024 peak.
Industry Headwinds Mount
Several factors are driving the selloff. First, the memory industry faces renewed competitive pressures, particularly if the U.S. allows imports of Chinese memory products. Apple has lobbied for such moves, arguing they could help curb inflation. Second, concerns about a circular funding model persist, with major players like Nvidia and AMD investing in companies that later become customers—a dynamic that raises questions about sustainability.
Additionally, the memory sector is historically cyclical, prone to boom-and-bust cycles. In 2023, Western Digital's revenue collapsed from $18 billion to $6 billion, a stark reminder of the volatility. SanDisk has tried to mitigate this through long-term supply agreements with firms like Meta Platforms, but the broader market remains wary.
Analyst Views Diverge
Analyst opinions on SanDisk are mixed. Susquehanna's Mehdi Hosseini recently lowered his price target from $3,250 to $3,050, while Wells Fargo sees the stock rising to $1,620. Evercore and Wedbush maintain targets of $3,100 and $2,000, respectively. The wide range reflects uncertainty about earnings and sector dynamics.
For context, the recent selloff has also hit other memory names, as highlighted in our coverage of Micron, SanDisk, SK Hynix slide as CXMT's 466% debut stokes China chip fears. Meanwhile, some analysts see a potential rebound, as noted in UBS Flags Potential Rebound for Broadcom, Sandisk, Oracle as AI Selloff Nears End.
Investors should monitor upcoming earnings and sector developments closely. The memory industry's cyclical nature and competitive landscape suggest that volatility may persist.
This article is for informational purposes only and does not constitute financial advice.
