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▲ SanDisk (SNDK)/AI generated image
As SanDisk (SNDK) stock has halved from its year-high, this week's earnings announcement has emerged as a turning point for a rebound.
According to Benzinga on August 3 (local time), SanDisk's stock price has fallen by about 50% from its year-high due to strong selling pressure in the memory semiconductor sector. The Roundhill Memory ETF (DRAM), which tracks the sector's trend, also fell by about 40% from its year-high. The stock prices of major memory companies such as Micron, Samsung Electronics, SK Hynix, and Western Digital also dropped significantly from their all-time highs.
Market attention is focused on SanDisk's earnings, which will be announced this Wednesday. Market forecasts anticipate a 341% surge in last quarter's revenue to $8.4 billion. Earnings per share are expected to have jumped from $0.29 to $34.5. The annual revenue forecast is $19 billion, a 169% increase from the previous year.
The memory market continues to experience a state where demand exceeds supply. SanDisk has also signed multi-billion dollar multi-year contracts with Meta Platforms and Apple. These contracts include price caps and floors for products, serving as a mechanism to reduce earnings volatility.
However, the inherent boom-and-bust cycle of the memory industry is cited as a key risk. In 2023, many major memory companies recorded a 50% decrease in revenue. In contrast, Seagate Technologies (STX), which recently announced its earnings, recorded $3.63 billion in revenue, exceeding market expectations of $3.49 billion. Samsung Electronics, SK Hynix, and Japan's Kioxia also announced strong earnings.
The options market anticipates significant volatility after SanDisk's earnings announcement. Implied volatility has risen to 185%, surpassing historical volatility of 165%. The put-call volume ratio for Friday-expiring options was 0.92, and the put-call open interest ratio was 0.90. The stock has recently formed a downward channel but maintains a bull flag pattern. It formed a bottom near the 200-day exponential moving average and the Fibonacci 50% retracement line, and Benzinga suggests the $1,500 level as a technical target for a rebound.
[Article Key Summary]
-SanDisk's stock price has fallen by about 50% from its year-high amid selling pressure in the memory semiconductor sector.
-The market expects SanDisk's revenue for the last quarter to have increased by 341% to $8.4 billion.
-With implied volatility rising to 185%, earnings and memory industry conditions are expected to determine whether the stock rebounds.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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