Citron Research has three main reasons for shorting SanDisk: Samsung competition, Western Digital’s recent reduction of its SanDisk stake, and historical patterns of cyclical peaks. Citron pointed out that Samsung has stated it will not sell products below a 50% gross margin, and is entering SanDisk’s core SSD market with its most advanced chips. Currently, Samsung has production capacity set to double the 2018 peak, and once it hits the market, the supply-demand dynamic could “flip in one earnings call.” Citron also stated that SanDisk should not be priced like Nvidia, as “Nvidia has a moat, while SanDisk sells a commodity.”
After Citron Research’s announcement to short, SanDisk, the storage chip darling of the AI boom, saw a significant drop in its stock price.
On Tuesday, Eastern Time, Citron posted on social media, claiming that the market’s pricing logic for SanDisk is fundamentally flawed, and the current storage chip supply tightness is merely a “mirage” with the cycle peak approaching. After the post, SanDisk (NASDAQ:SNDK) stock price immediately plummeted in early trading, with the decline reaching 5.7%. The stock briefly reversed to an uptick in the middle of the day before dropping again, surpassing a 6% decrease.
Before Citron’s shorting announcement, SanDisk’s stock had risen nearly 40% in the past month, gaining about 175% since the beginning of 2026, and more than 1200% over the past 12 months. Citron’s involvement has raised doubts about the sustainability of this strong stock and reignited concerns over the cyclical nature of the storage chip industry.
On the retail investor platform Stocktwits, sentiment related to SNDK has shifted to “bearish” over the past 24 hours, but the discussion volume remains low. Some users on the platform have expressed reservations about Citron’s judgment.
One user, thealster, commented that Citron’s short call is correct in direction but might be two years too early. He pointed out that Samsung is now earning more from high-bandwidth memory (HBM) chips for Nvidia’s products than from NAND flash memory and that the two companies are “heading in different directions.”
Three Main Reasons Citron Is Shorting SanDisk
Citron’s short thesis is based on three main arguments: competition from Samsung, the signal from long-term SanDisk investor Western Digital’s stock reduction, and the historical patterns of cyclical peaks.
Regarding Samsung’s competition, Citron emphasized that Samsung Electronics has a 30-year strategy of aggressively capturing market share at the expense of profits. When companies like SanDisk enjoy high gross margins, Samsung massively expands production and cuts prices.
Citron believes the current threat is particularly severe: Samsung recently publicly stated that it will not sell products below a 50% gross margin and is now introducing its most advanced chips into SanDisk’s core battlefield—the high-end solid-state drive (SSD) market. Citron wrote: “They are not just the gorilla in terms of capacity, they are attacking SanDisk’s premium customers with newer, cheaper technology.”
Citron also pointed to a key signal: Western Digital recently sold a large number of SanDisk shares at a price about 25% lower than the current market value, using the proceeds to pay off debt. Citron views this move as not coincidental, but rather a signal from Western Digital that it anticipates the storage cycle is nearing its peak. “While TV hosts are still hyping up retail investors, long-term shareholder Western Digital has quietly exited,” Citron wrote.
Regarding the cyclical peak logic, Citron compared the current supply tightness in the storage market to a “mirage,” arguing that the root cause lies in a temporary bottleneck in another Samsung product line, which has a clear “expiry date.”
Citron warned that production capacity that is already set to double the 2018 peak is about to hit the market, and once it does, the supply-demand dynamic could “flip in one earnings call.”
Citron also compared SanDisk to Nvidia: “The market is pricing SanDisk like it’s Nvidia, but there’s a problem: Nvidia has a moat, while SanDisk is selling a commodity.”
Citron’s Full Post
Here is the full post that Citron published on the X platform (formerly Twitter) during the early hours of Tuesday’s U.S. trading session:
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