Sandisk Tumbles After Revenue, Earnings Forecasts Miss Estimates

Sandisk was one of the largest public holdings of the hedge fund of 24-year-old former wunderkind, Leopold Aschenbrenner, and its July collapse from $2300 to $1000 was chief the main reasons why the former OpenAI employee had to liquidate his extremely overlevered hedge fund and sell all positions at a 10% discount to Citadel to meet a volley of endless margin calls.

Well, if he has some dry powder left he just may be able to repurchase some or all of his portfolio from Ken Griffen following the plunge of Sandisk after hours (we jest, of course), not because earnings were weak – they beat solidly – but because the company’s revenue guidance was very disappointing… and for a stock like SNDK which is priced to perfection beyond 2030 on the assumption that nobody else can produce the biggest commodity product in electronics – memory chips – the guidance was rather dismal. 

Here is what SNDK reported for fiscal Q4:

• EPS $39.25 vs Est. $34.37
• Revenue $8.97BN vs Est. $8.64BN
  • Data Center Revenue $3.0B vs Est. $2.6B
• Operating Income $7.0B vs Est. $6.4B
  • Adjusted gross margin 84.6%, estimate 81.5%
• Free cash flow $7.08 billion

And while historical were fine, it was the company’s Q1 guidance that sent its stock tumbling after hours: 

• Sees revenue $10.30 billion to $10.80 billion, far below the median estimate of $11.16 billion 
• Sees adjusted EPS $44.00 to $46.00, a midline also below the estimate $45.58

Commenting on the results, SNDK said that “as the cloud and other data-intensive workloads continue to expand, we remain confident in the long-term growth trajectory of our business, further margin expansion, and strong free cash flow generation.”

Perhaps, although one look at prevailing NAND prices indicates that the peak is now well in the rearview mirror…

… and the market agrees with the stock, which surged about 40% in the past few days since the Citadel takeover of the Situational Awareness hedge fund, sliding and back to about half of its all time high hit in early June.