Sandisk's stock falls as Western Digital plans to sell shares. What investors need to know.

By Emily Bary

The move, while not unexpected, will allow Western Digital to bolster its balance sheet and reduce debt

Sandisk's stock has seen standout gains since a spinoff from Western Digital last February

Western Digital is looking to cash in on Sandisk's explosive rally by selling shares of the company it spun off roughly a year ago.

Sandisk (SNDK) on Tuesday announced a $3.09 billion secondary offering of its shares, to be sold by Western Digital (WDC), its former parent company. Western Digital intends to conduct a debt-for-equity exchange whereby, before the offering is complete, it exchanges shares for some debt held by J.P. Morgan and Bank of America affiliates.

On Wednesday, Sandisk disclosed that the public offering price would be $545. Sandisk itself will not receive any proceeds from the secondary offering.

Shares of Sandisk were off 2.7% in Wednesday's premarket action, while shares of Western Digital were up 1.6%.

See also: Sandisk's stock gets 'one of the most delayed upgrades in history' after blowout earnings

The move shouldn't come as a major surprise to Sandisk or Western Digital investors, given comments made on Western Digital's last earnings call.

"As you probably know, we still have 7.5 million Sandisk shares and it's our intention to monetize those shares before the one-year anniversary of the separation," CFO Kris Sennesael said on the call.

He noted that the proceeds would go toward further debt reduction.

Don't miss: Memory-chip stocks are still quite cheap - especially if you look overseas

The company has until Feb. 21 to unload the shares without suffering tax consequences, according to a registration filing with the Securities and Exchange Commission made last year.

Evercore ISI analyst Amit Daryanani wrote that the transaction marks "a material acceleration of WDC's deleveraging efforts," as the company may move toward a net-cash position over time.

The company "gains enhanced capital-allocation flexibility, positioning the company to prioritize buybacks, dividends or strategic reinvestment while reinforcing its transition to a pure-play HDD player with improved earnings quality and a cleaner financial profile," Daryanani added, referring to hard-disk drives.

And he saw the potential for this to drive a 4% to 6% boost in earnings per share in the "near-to-medium term," as buybacks reduce the number of shares outstanding and thereby increase EPS.

Sandisk shares have been red hot in recent months, rising more than 1,500% since the spinoff from Western Digital took place last February. Sandisk's stock is up almost 150% just in 2026, ranking first among S&P 500 SPX components, while Western Digital's ranks third, up 65%.

Read: Why Micron's stock is a standout gainer as the market falters

-Emily Bary

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

02-18-26 0713ET