SanDisk "Flash Crash"! Bearish Citron claims supply shortages are a "mirage" and the cycle is about to peak

After well-known short seller Citron Research announced its short position, the AI-driven storage chip “darling” SanDisk (SNDK) saw a sharp decline in its intraday stock price.

On Tuesday, the 24th, Eastern Time, Citron posted on social media claiming that there is a fundamental flaw in the market’s valuation logic for SanDisk. The current storage chip supply shortage is just a “mirage,” and the cycle top is imminent. Following the post, SanDisk’s stock price immediately plunged in the morning session, with a decline of up to 5.7%. It briefly turned positive at the start of the midday, but then fell again, exceeding a 6% drop.

Before Citron issued its short report, SanDisk’s stock had already risen nearly 40% over the past month, about 175% since 2026, and surged over 1200% in the past 12 months. Citron’s involvement has raised doubts about the sustainability of this strong performance and reignited investor concerns about the storage chip industry’s cyclical outlook.

On the retail platform Stocktwits, sentiment related to SNDK shifted to “bearish” within the past 24 hours, though discussion volume remains low. Some platform users expressed reservations about Citron’s judgment.

One user, thealster, commented that Citron’s short thesis is correct in direction but may be about two years early. He pointed out that Samsung is now more profitable in high-bandwidth memory (HBM) chips supporting Nvidia’s products than in NAND flash memory, and the two companies are “heading in different directions.”

Three main reasons Citron is bearish on SanDisk

Citron’s short thesis revolves around three main points: the threat from Samsung’s competition, signals of Western Digital (WD) reducing its holdings in SanDisk, and the historical cycle top pattern.

Regarding Samsung’s competition, Citron notes that Samsung Electronics has a 30-year history of prioritizing market share over profit, expanding capacity and lowering prices when pure storage companies like SanDisk enjoy high margins.

Citron believes this threat is especially severe now: Samsung recently stated it will not sell products below a 50% gross margin and is integrating its most advanced chips into SanDisk’s core market—high-end SSDs. Citron wrote, “They’re not just a capacity gorilla—they’re using newer, cheaper technology to directly target SanDisk’s premium customers.”

Citron also highlighted another key signal: Western Digital recently sold a large portion of its SanDisk holdings at a price about 25% below the current market value, using the proceeds to pay down debt. Citron sees this as no coincidence, interpreting it as WD’s early judgment that the storage cycle is nearing its peak. “TV guests are still pounding the table, pushing retail investors into the bull market, but Western Digital has quietly offloaded shares long ago,” Citron wrote.

On the cycle top logic, Citron compares the current storage market supply tightness to a “mirage,” attributing it to a temporary yield bottleneck in Samsung’s other product line, which has a clear “expiration date.”

Citron warns that capacity equal to twice the 2018 peak is already in the pipeline, and once it hits the market, the supply-demand balance could reverse dramatically in a single earnings call.

Citron also draws a parallel between SanDisk and Nvidia: “The market is pricing SanDisk like Nvidia, but there’s a problem: Nvidia has a moat, SanDisk sells commodities.”

Citron’s full post

Below is the full post Citron posted on social platform X at the start of Tuesday’s US stock market session:

“Citron Short on SanDisk (SNDK)—The Warning Bell Won’t Ring at the Top

We don’t need Anthropic to announce entering NAND flash to short SanDisk. Samsung has been that 800-pound gorilla for 30 years, and it’s been using this playbook all along.

TV guests are still pounding the table, pushing retail investors into the bull market, but long-term investor Western Digital sold a large chunk of its holdings at a price 25% below the current market value just days ago.

Ask yourself why. Because they know the cycle is approaching its peak—they won’t wait for the bell to ring.

The market is pricing SanDisk like Nvidia (NVDA). But there’s a problem: Nvidia has a moat, SanDisk sells commodities.

We’ve seen similar situations in 2008, 2012, 2018. This time is no different. The memory market is cyclical, and cycles always reach a peak.

Samsung has prioritized market share over profit margin for 30 years. They wait until pure SSD companies like SanDisk operate at 50% gross margin before they move. But this time, it’s worse. All investors bullish on SanDisk should read this: Samsung just announced they won’t sell any products with less than 50% gross margin and will send their best chips into SanDisk’s core high-end SSD market. Samsung is no longer just a capacity giant—they’re using cheaper, newer technology to snatch up SanDisk’s premium customers. And what’s the only reason for the current supply tightness? A temporary yield issue in Samsung’s other product line.

This bottleneck will eventually pass.

Capacity already twice the 2018 peak is waiting to enter the market. This so-called “supply shortage” is just a mirage, and it could vanish in a single earnings call.

To put it simply: shorting SanDisk is like skating toward the end of the ice rink. When the market cycle normalizes, this stock’s price will fall even lower.”

Risk warning and disclaimer

Market risks are inherent; invest cautiously. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.