SanDisk Shares Plunge as Fab Startup Costs Crush Profit Estimates

Another quarter, another tech giant bleeding cash on 'strategic investments.' SanDisk just joined the club—shares tanked after fab expansion costs gutted earnings.

Wall Street's crystal ball shattered—again. Analysts expected fat margins; instead, they got a masterclass in semiconductor economics. Building cutting-edge fabs isn't cheap, and shareholders are paying the price.

Here's the kicker: these 'temporary' costs always last longer than management promises. But hey, at least the executives still get their bonuses while retail investors eat the losses. Classic tech sector math.

Key Takeaways

• Sandisk's current-quarter outlook missed estimates as the computer flash drive maker faced higher startup costs.
• The top end of the company's adjusted earnings guidance was below Visible Alpha forecast.
• Sandisk reported better-than-expected quarterly results.

Sandisk (SNDK) shares slumped Friday, a day after the Maker of computer flash drives gave lower-than-expected profit guidance as startup costs increase.

The company anticipates fiscal 2026 first-quarter adjusted earnings per share (EPS) of $0.70 to $0.90, while analysts surveyed by Visible Alpha were looking for $0.95.

Sandisk sees fab startup costs of $60 million, up from $42 million in the fourth quarter. CEO David Goeckeler explained on the earnings call that going through a fab startup is "a pretty big episodic event," according to a transcript provided by AlphaSense. Goeckeler added that the company sees those costs going down throughout the fiscal year, and it will be "going to turn what have been headwinds in the business into tailwinds, and all of that against the backdrop of what we see as a favorable supply and demand environment."

The outlook offset a positive fiscal 2025 fourth-quarter financial report. Sandisk posted adjusted EPS of $0.29 on revenue that increased 12% year-over-year to $1.90 billion. Analysts surveyed by Visible Alpha had expected $0.05 and $1.80 billion, respectively.

Shares of Sandisk began trading in February, when Western Digital (WDC) spun off its flash drive business. Even with today's nearly 5% drop, the stock price has added a quarter of its value since then.

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