Sandisk (NASDAQ: SNDK) experienced a dramatic 55% decline in its stock price during July, wiping out approximately $198 billion in market capitalization. The shares closed at $1,015.89 on Wednesday, down 7.3% for the session, and edged 0.4% lower in premarket trading. This steep sell-off has brought the company's valuation down from a peak of $349 billion on June 22 to roughly $150 billion by the end of July.
The primary driver of this decline is not an earnings downgrade but rather an extraordinary rise in analyst expectations. Over the past three months, consensus estimates for Sandisk's fiscal fourth-quarter earnings per share (EPS) have surged 48% to $34.67, which is 5.1% above the top end of management's guidance range of $30 to $33. This sets the stage for the August 5 earnings report to be a critical test of whether the company can deliver another significant outperformance.
The selling pressure intensified over four consecutive sessions, with the stock dropping a cumulative 36.9%. The daily declines were severe: July 24 fell 10.8% to $1,436.56, July 27 dropped 11.0% to $1,278.23, July 28 plunged 14.2% to $1,096.10, and July 29 lost 7.3% to $1,015.89. Trading volume on July 29 reached 24.5 million shares, about 79% above the 65-day average, indicating widespread selling.
Sandisk's July performance trailed key competitors in the storage industry. Micron Technology (NASDAQ: MU) fell 36.0% during the month, while Western Digital (NASDAQ: WDC) declined 27.7%. Despite the sharp drop, Sandisk still boasts impressive long-term gains, having advanced 2,267% over the past 12 months and 328% year-to-date.
Analyst expectations have shifted sharply upward. The fiscal Q4 EPS consensus has risen 48.3% from $23.38 three months ago to $34.67, while the fiscal Q1 2027 EPS consensus has climbed 52.5% from $28.81 to $43.94. The company's most recent quarterly results showed revenue of $5.95 billion and adjusted EPS of $23.41. Management guided fourth-quarter revenue between $7.75 billion and $8.25 billion, implying sequential EPS growth of about 35% at the midpoint, but consensus estimates call for roughly 48% growth, leaving little room for error.
Industry data remains robust. Samsung Electronics (OTC: SSNLF) noted that memory chip shortages may persist until 2028, with executive Jaejune Kim stating, "Almost all customers are requesting multi-year supply contracts." However, Samsung's shares slipped 0.7% after an early rise of 8.4%, and SK Hynix (OTC: HXSCL) declined 5.6% despite strong earnings. Analyst Kim Seok-hwan of Mirae Asset commented, "The chip narrative has weakened."
New pressure emerged from China, where a significant memory IPO and progress in local chip-tool technology stoked concerns about potential supply increases and reduced pricing power for Sandisk. Risks include a sustained rise in NAND flash prices or another stronger-than-expected earnings report, which could trigger a rebound. Conversely, lower margins, reduced guidance, or faster capacity expansion by Chinese companies could prolong the adjustment.
Sandisk is scheduled to report its fiscal fourth-quarter results on August 5 at 4:30 p.m. EDT, followed by an investor day on August 13. The outcomes of these events will be crucial in determining whether the elevated estimates align with actual performance or if further stock price corrections are in store.
