SanDisk stock extended its downward trend, falling to its lowest level since July 29. SNDK dropped to $1,037, and the company’s market value has slumped from a record high of $347 billion in June to about $147 billion. The retreat could continue in the coming days, even as the company moves ahead with an 8-for-1 stock split.
SanDisk stock technicals point to more downside
SNDK has been in a strong sell-off in the past few months. It has dropped from a high of $1,914 in September to the current $1,034. Its current level is at the lowest point in July this year. Moving below that level would confirm a bearish breakout.
The stock has already dropped below the 50-day and 200-day Exponential Moving Averages (EMA) and is about to form a death cross. At the same time, the Percentage Price Oscillator (PPO) has continued falling, with the two lines being its lowest level since August this year.
The stock will likely continue rising in the near term. If this happens, the initial target to watch will be at $937, the 61.8% Fibonacci Retracement level. A drop below that price will point to more downside, with the next level to watch being at $547, the 78.6% Fibonacci Retracement level.
SanDisk has strong fundamentals ahead of its stock split
SanDisk stock has continued its strong sell-off this month, even as its business thrives. Its last earnings report showed that its revenue jumped to $11 billion, up by 23% from a quarter earlier. This revenue was 378% from the same period last year. This surge also coincided with the jump in its profit, with the net income hitting $8 billion.
Most notably, analysts are optimistic that the company has more room for growth. Its annual revenue is expected to jump by 144% to $50 billion, followed by $60.6 billion in the following year. SanDisk’s earnings per share is expected to jump to $227.8 this year from $70.8 last year.
Most importantly, the company has addressed some of the challenges that have been going in the memory industry. For example, it has inked major deals with some of the biggest companies in the industry, setting the floor and ceiling of future memory sales.
The company has also announced an eight-for-one forward stock split, set to take effect on November 19. The split will make the shares more affordable for retail investors. SanDisk also said it returned $5 billion to shareholders and plans to continue doing so.
All this is happening at a time when the stock is highly undervalued. It has a forward price-to-earnings ratio of 4.95, much lower than the sector median of 21. This multiple is substantially lower than other companies, making it one of the top bargains on Wall Street.