SanDisk shares tumbled 5% Tuesday after Citron Research announced a short position in the memory chip maker, citing concerns about cyclical pressures in the memory market. The stock, which had surged 175% this year and over 1,200% in the past twelve months, dropped sharply following Citron's announcement.

Citron Research pointed to Western Digital's recent sale of a significant portion of its SanDisk holdings at prices 25% lower than current levels as a warning sign. The short-seller argued that the market is pricing SanDisk like NVIDIA, but noted a key difference: "NVIDIA has a moat. SanDisk sells a commodity." Citron highlighted Samsung's historical strategy of prioritizing market share over margins during memory cycles, referencing similar patterns in 2008, 2012, and 2018.

The firm noted Samsung's recent announcement that it won't sell products under 50% margins and is moving premium chips into the same SSD market where SanDisk operates. "With double the capacity of the 2018 peak waiting in the wings, this 'shortage' is a supply mirage that can vanish in a single earnings call," Citron commented, suggesting current supply constraints are temporary.