$SanDisk (SNDK.US)$ A boost for long-term holders. As the pa...
$SanDisk (SNDK.US)$ A boost for long-term holders. As the parent company of SNDK, WDC holds approximately 7-8 million of SNDK's original shares. According to the contract, before the first anniversary of SNDK’s IPO (24/2), WDC must sell all its original shares into the market. Therefore, we are currently witnessing a game between WDC and institutional investors (WDC must sell its shares within the deadline, while institutions want to absorb these shares but are unwilling to pay the price of 600-700, which is why the stock price has been pushed down from 720 to around 500).
Institutions will not let the stock price fall too low either, so the lowest it should go is around 500 (in the last few days, 20-23/2).
As retail investors, we can only wait for the dust to settle in this博弈 (game). Friends who still have liquidity can抄底 (buy at the bottom) in the last few days; after the 24th, it should be clear skies.
Don't be deceived by false rallies these few days. Do not buy above 535; if you're afraid of missing the opportunity, you can buy around 535, but it might drop to 500.
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新手村村長 OP : Indeed, compared to the daily trading volume, the 7-8 million shares in WDC's hands may not seem like much. However, if institutions need more than just these 7-8 million shares and are looking for a chain reaction, that's a different story. WDC is no fool; they know that a massive sell-off at once would lead to a sharp drop in stock price, making it hard for them to get a good price. Moreover, these 7-8 million shares only represent 20% of WDC's original holdings, with the remaining 80% already distributed to shareholders (it’s unclear whether they’ve also been selling during this time).
When the stock price rose to 725 after the earnings report, WDC started selling. Institutional investors, knowing they had a 24/2 restriction, weren't in a rush to buy. Retail investors, unaware of this, saw the pullback in stock price but believed the fundamentals were strong, so they wanted to buy the dip. Without institutional support, the price kept dropping lower as retail investors grew anxious and started selling along with WDC’s price decline. When it dropped below 600, or even to 550... institutions finally stepped in to buy (as they also didn’t want the price to fall too much).
The good news is that, following the earnings report, the SNDK shares held by shareholders have basically been unlocked. However, they did not sell their shares at $725, indicating that they believe the price will definitely exceed $725 before the end of the year (shareholders typically sell shares at the end of the year for tax purposes).