Western Digital (NASDAQ:WDC) Stock Falls 17.4% - Here's What Happened

Key Points

• Western Digital shares plunged 17.4% to $267.63 on Thursday, with trading volume more than double its average.
• Investor concerns about AI-related data-center spending, election uncertainty and memory pricing pressured WDC alongside other memory and storage stocks; the reported call for an AI-development pause was not an enacted policy change.
• Despite the selloff, the article cites supportive fundamentals: Western Digital beat quarterly earnings and revenue estimates, while stronger HDD pricing, demand for high-capacity drives and operational efficiencies are helping margins.

Western Digital Corporation (NASDAQ:WDC - Get Free Report) shares dropped 17.4% on Thursday. The company traded as low as $265.00 and last traded at $267.63. 17,865,552 shares changed hands during trading, an increase of 106% from the average session volume of 8,685,013 shares. The stock had previously closed at $323.83.

Key Stories Impacting Western Digital

Here are the key news stories impacting Western Digital this week:

• Positive Sentiment: Margins and an upgrade support the bullish case. Stronger pricing, demand for higher-capacity hard drives and operational efficiencies are helping expand gross margins, with further improvement anticipated. Zacks Research also upgraded WDC from “hold” to “strong buy.” Western Digital's Gross Margin Momentum: How Long Can It Last? Zacks Research upgrade
• Neutral Sentiment: A valuation estimate was lowered, though it remains well above the trading price cited in the report. One model’s fair-value estimate fell from $650.67 to $613.38, reflecting tension between strong HDD fundamentals and questions about valuation, future supply and capital spending. Western Digital Stock Sees Fair Value Cut
• Negative Sentiment: AI-policy worries are weighing on the sector. A lawmaker’s call for a pause on AI development has added to investor concerns about data-center investment, pressuring memory and storage shares including WDC. The report describes a market reaction, not an enacted policy change. AI pause call extends memory rout
• Negative Sentiment: Broader memory-and-storage selling is amplifying the pressure. WDC has declined alongside peers as investors weigh election-related uncertainty and concerns about memory pricing, despite the sector’s recent strong results. Election and memory price worries weigh

Wall Street Analysts Forecast Growth

WDC has been the subject of a number of recent analyst reports. Wells Fargo & Company cut their price target on shares of Western Digital from $730.00 to $450.00 and set an "overweight" rating for the company in a research note on Friday, October 16th. Weiss Ratings lowered shares of Western Digital from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Tuesday, October 13th. Morgan Stanley set a $668.00 target price on shares of Western Digital and gave the company an "overweight" rating in a report on Friday, October 23rd. Zacks Research upgraded shares of Western Digital from a "hold" rating to a "strong-buy" rating in a research note on Tuesday. Finally, Cantor Fitzgerald reduced their price target on Western Digital from $900.00 to $625.00 and set an "overweight" rating for the company in a report on Friday, October 23rd. Two equities research analysts have rated the stock with a Strong Buy rating, twenty-one have issued a Buy rating and five have assigned a Hold rating to the stock. According to MarketBeat.com, Western Digital has an average rating of "Moderate Buy" and an average target price of $591.04.

Western Digital Stock Performance

The firm has a fifty day simple moving average of $414.74 and a 200-day simple moving average of $418.54. The firm has a market cap of $100.18 billion, a price-to-earnings ratio of 10.39, a P/E/G ratio of 1.23 and a beta of 2.27.

Western Digital (NASDAQ:WDC - Get Free Report) last released its quarterly earnings data on Thursday, October 22nd. The data storage provider reported $4.64 EPS for the quarter, beating the consensus estimate of $4.11 by $0.53. The firm had revenue of $4.38 billion for the quarter, compared to the consensus estimate of $4.14 billion. Western Digital had a net margin of 69.20% and a return on equity of 55.62%. The company's quarterly revenue was up 55.5% on a year-over-year basis. During the same period in the previous year, the company earned $1.78 earnings per share. Analysts expect that Western Digital Corporation will post 23.62 earnings per share for the current fiscal year.

Western Digital Increases Dividend

The company also recently announced a quarterly dividend, which will be paid on Thursday, December 17th. Stockholders of record on Friday, December 4th will be issued a dividend of $0.1750 per share. This is an increase from Western Digital's previous quarterly dividend of $0.15. This represents a $0.70 dividend on an annualized basis and a dividend yield of 0.3%. The ex-dividend date of this dividend is Friday, December 4th. Western Digital's payout ratio is 2.33%.

Insiders Place Their Bets

In other Western Digital news, insider Vidyadhara K. Gubbi sold 1,795 shares of Western Digital stock in a transaction dated Friday, September 4th. The stock was sold at an average price of $459.87, for a total value of $825,466.65. Following the transaction, the insider owned 80,571 shares in the company, valued at $37,052,185.77. The trade was a 2.18% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available at this link. Also, insider Cynthia L. Tregillis sold 807 shares of the stock in a transaction on Wednesday, October 21st. The shares were sold at an average price of $380.00, for a total value of $306,660.00. Following the completion of the transaction, the insider owned 108,928 shares of the company's stock, valued at $41,392,640. The trade was a 0.74% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 25,436 shares of company stock worth $11,340,064 in the last quarter. 0.20% of the stock is currently owned by corporate insiders.

Institutional Investors Weigh In On Western Digital

Several hedge funds and other institutional investors have recently bought and sold shares of the stock. Legal & General Group Plc bought a new stake in shares of Western Digital during the 2nd quarter valued at $1,602,927,000. Anther Capital Ltd purchased a new stake in shares of Western Digital during the second quarter worth about $901,601,000. Deutsche Bank AG purchased a new stake in Western Digital during the 2nd quarter valued at approximately $885,565,000. Value Aligned Research Advisors LLC bought a new stake in Western Digital in the 1st quarter valued at $350,403,000. Finally, Renaissance Technologies LLC boosted its holdings in shares of Western Digital by 15.5% during the 1st quarter. Renaissance Technologies LLC now owns 1,146,133 shares of the data storage provider's stock valued at $310,018,000 after purchasing an additional 153,600 shares during the last quarter. 92.51% of the stock is owned by institutional investors.

About Western Digital

Western Digital Corporation NASDAQ: WDC is a data storage technology company that develops and manufactures hard disk drives (HDDs) and related storage solutions. Its products are used in data centers, cloud infrastructure, enterprise systems, personal computers, gaming platforms and external storage devices.

The company offers HDD-based products for business and consumer applications, including high-capacity drives designed for hyperscale and cloud data centers, enterprise storage environments, network-attached storage systems and personal computing.

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