Why SanDisk Dropped 21% in March

SNDK Chart

SNDK data by YCharts

What: Shares of flash member storage manufacturer SanDisk sank 21% in March, according to S&P Capital IQ data , as investors reacted negatively to the company's slashing its revenue forecast for its first fiscal quarter and withdrawing its full-year guidance. Later in the month, shares remained under pressure when law firms announced possible lawsuits for potential securities violations.

Now what: For investors, this is both familiar and unfamiliar. The company also warned on forecast during the fourth quarter, but for different reasons. During the fourth-quarter warning, the company blamed the forecast on specific product: iNAND memory. This quarter, the company blamed a variety of factors including delays and supply issues, lower enterprise sales, and general overall lower pricing for the lower forecast.

In addition, the company withdrew full-year guidance. What followed was a host of analyst downgrades from Goldman Sachs , Bank of America , Evercore, and BTIG. Finally, toward the end of the month, multiple law firms announced investigations focusing on whether SanDisk violated federal securities laws. Many of those investigations have since become filed lawsuits.

So what: SanDisk appears to be a bifurcated stock, with one group confounded by continued forecast slashes and perplexed by the potential lawsuit while an entirely other group notes the company still has a necessary and in-demand product. Fellow Fool Ashraf Eassa firmly blames SanDisk's delay and supply issues on its own execution rather than an unhealthy market.

And while Ashraf correctly notes that the second half was always supposed to be better for SanDisk, according to management, I'm not sure the company can properly deliver. In the end, the company is in a highly commoditized business. Even with healthy demand, it's not entirely possible SanDisk will benefit. Recently, a rumor came out that Apple is considering using Samsung exclusively for NAND flash memory in the iPhone 6s after a host of providers, including SanDisk, had performance issues. In light of the legal troubles and execution issues, I'm willing to watch this stock from the sidelines.

This $19 trillion industry could destroy the Internet

One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism... The Economist is calling it "transformative"... But you'll probably just call it "how I made my millions." Don't be too late to the party -- click here for one stock to own when the Web goes dark.

The article Why SanDisk Dropped 21% in March originally appeared on

Jamal Carnette owns shares of Apple. The Motley Fool recommends Apple, Bank of America, and Goldman Sachs. The Motley Fool owns shares of Apple and Bank of America. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More