SanDisk Shares Drop as Western Digital Moves to Sell Holdings

Western Digital has filed to sell up to 7,513,019 shares of SanDisk common stock, a move that sent SanDisk's shares down 1% in after-hours trading on Tuesday. The filing came as Western Digital works to strengthen its balance sheet by reducing debt, with the sale valued at around $3.09 billion based on recent prices. SanDisk gets nothing from the proceeds, as Western Digital owns all the shares being sold.

Background

Western Digital and SanDisk have a long history tied to the storage industry. Back in early 2025, Western Digital split its business into two parts. It kept the hard disk drive side, known as the HDD business, and spun off the flash memory operations into SanDisk.

On January 25, 2025, Western Digital's board approved giving 80.1% of its SanDisk shares to its own shareholders. Each Western Digital shareholder got one SanDisk share for every three Western Digital shares they held. The split happened on February 21, 2025. SanDisk took on the flash business assets and some debt, including a $2 billion term loan. It paid Western Digital about $1.5 billion in cash as part of the deal.

After the split, SanDisk started trading on Nasdaq under the ticker SNDK on February 24, 2025. Western Digital held onto 28.8 million SanDisk shares at first, about a 19.9% stake. Later, in June 2025, Western Digital swapped 21.3 million of those shares for debt relief in a debt-for-equity deal. That left it with the 7.5 million shares it's now looking to sell.

The two companies signed a stockholder's and registration rights agreement. That deal requires SanDisk to register these shares for resale so Western Digital can sell them freely. This latest filing follows that agreement.

Western Digital makes hard drives mainly for data centers. It competes in a market with just a few big players, like Seagate. Much of its work happens in Asia. SanDisk focuses on flash memory, used in phones, computers, and other devices.

Key Details

The filing registers 7,513,019 SanDisk shares for resale. Western Digital can sell them over time through public markets or other methods. It could also trade some shares for its own debt or give them to shareholders pro rata.

SanDisk closed at $626.56 per share on Nasdaq on February 13, 2026. At that price, the shares are worth roughly $4.7 billion, but estimates put the sale at $3.09 billion, likely accounting for discounts or market changes. J.P. Morgan Securities and BofA Securities lead as underwriters.

SanDisk confirmed it will not sell any shares or get money from this. All shares come from Western Digital's holdings. Western Digital says it has no other SanDisk stock or equity left after this.

Western Digital's Financial Picture

Western Digital has a current ratio of 1.45, showing it can cover short-term bills. Its debt-to-equity ratio sits at 0.63, a sign it uses debt in a measured way. But insiders sold shares 10 times in the last three months.

The company trades at a P/E ratio of 28.49, near its one-year high. Price-to-sales is 9.79, close to a 10-year peak. Price-to-book is 13.58, also high. Its market cap is about $96.32 billion. Analysts give it a moderate buy rating. The stock's beta of 1.98 means it swings more than the market.

An Altman Z-Score of 8.97 points to very low bankruptcy risk. A Beneish M-Score of -2.76 suggests no funny accounting.

"This secondary offering allows us to further optimize our capital structure and focus on our core HDD operations," said a Western Digital spokesperson.

SanDisk's stock fell to around $619 in after-hours after the news. The drop reflects more shares hitting the market, which can push prices down.

What This Means

For SanDisk, extra shares for sale means more supply. That can keep pressure on the stock price in the short term. Investors watch how fast Western Digital sells and at what price. If sales happen slowly, the hit might be small. A quick dump could hurt more.

Western Digital gets cash to pay down debt. Its balance sheet improves, giving room for investments or buybacks. The company already cut debt through the earlier swap. This sale wraps up its SanDisk exit, letting it focus on hard drives amid demand from data centers and AI growth.

The storage world faces changes. Flash memory competes with hard drives for cloud storage. Hard drives hold big data cheaply, while flash is faster. Both companies deal with supply chain issues in Asia and tech shifts.

Investors in SanDisk might see this as the end of overhang from the split. Western Digital's full exit removes uncertainty. But high valuations and insider sales at Western Digital call for caution.

SanDisk shareholders could face dilution in feel, even if no new shares issue. The market just grows with these sales. Western Digital shareholders might get a pro rata share if distributed that way, adding value.

Broader market eyes tech stocks. Storage demand rises with data needs. This move fits companies trimming non-core assets to stay lean.

Western Digital's stock holds steady so far. Its RSI at 60.5 shows neutral momentum. The 50-day moving average at $215.16 points up. SanDisk must show flash business strength to shake off the dip.

The sale shows how spin-offs evolve. What started as one company now stands apart, each chasing its path in storage.