SanDisk shares fell 5% on Tuesday after short-seller Citron Research announced a short position in the memory chip maker. The stock has surged 175% this year and over 1,200% in the past twelve months.

Other storage shares also slid on the news. Western Digital, Seagate Tech down 3% each; Micron down nearly 1%.

Citron Research cited concerns about cyclical pressures in the memory market and intensifying competition from Samsung. "Citron is Short $SNDK — They Don’t Ring a Bell at the Top. We don’t need Anthropic to announce they’re making NAND. Samsung is already the 800-pound gorilla, and they’ve been running this playbook for 30 years," the firm commented.

The short-seller 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. Citron 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.

The firm concluded: "Shorting $SNDK is skating to where the puck is going. By the time the cycle normalizes, this stock will already be much lower."