Why Sandisk Stock Popped Again Today

Sandisk (NASDAQ: SNDK) stock rode the coattails of Korean memory maker SK Hynix today, gaining 3.4% through 3 p.m. ET. (SK scored a 14% gain).

This is not a coincidence, and it's not entirely illogical, either.

The SK Hynix "IPO"

South Korea's SK Hynix, one of the biggest manufacturers of DRAM computer memory in the world, listed its American Depositary Receipts on the Nasdaq today under ticker symbol "SKHYV." SK Hynix IPO'ed its shares (it wasn't technically an IPO, though) for $149 apiece, and investors quickly bid that up to about $170 as they jumped at the chance to own a big DRAM stock that is not named Micron (NASDAQ: MU).

Sandisk, of course, manufactures NAND -- not DRAM -- but tomato, tomahto, right? Everyone's buying memory stocks today, and Sandisk is a memory stock, so... everyone's buying Sandisk, too. Logical, right?

What this means for Sandisk stock

Actually, it is sort of logical if you pay attention. Because at the same time as it was listing its ADRs on the Nasdaq today, SK Hynix was explaining to investors why they should buy those ADRs:

In contrast to other memory companies, which have promised that the memory shortage will last through 2027 or perhaps 2028, SK Hynix says the memory deficit will last until 2030 and beyond! What's more, 2027 will see "the worst-ever supply shortage" of computer memory in history, driving prices (and profits) through the roof.

Granted, SK Hynix is "talking its book here," and telling investors what it wants them to believe so they will buy its stock. But if SK Hynix is also correct in its forecast, then that promises windfall profits for companies like SK Hynix (and Sandisk, too) both in the short and the long term.

Buying Sandisk on that forecast is completely logical.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.