A Seeking Alpha sell call prices Micron 17% below where it trades

Work backwards from the two numbers that can be multiplied. An intrinsic value of $840.24 sitting about 17% below the market implies a price near $1,012 a share ^[5][7]. Read the same sentence the other way, as a market trading 17% above intrinsic value, and the implied price is about $983 ^[8]. The note does not print the price it was measured against. Those two readings are about $29 apart, against a gap of roughly $172 between the market and the estimate ^[9][12].

The estimate runs through the margin line. At 85.5% gross margin, 14.5 cents of every revenue dollar is cost, so expansion from here is capped at 14.5 points and reaches that cap only at zero cost of goods ^[10]. The downside has no equivalent ceiling. Give back ten points, to 75.5%, and gross profit falls about 12% on flat revenue ^[11]. Seeking Alpha's own figure is a range a full point wide, 85-86% ^[2].

The author's case runs on price. Decelerating ASP growth and stabilising margins are enough, he argues, to pull earnings and valuation lower with no downturn at all ^[4]. A low multiple computed on peak earnings becomes a high multiple on normalised earnings with the share price unchanged, and according to the author that peak is arriving in an extreme memory deficit with pricing acceleration that may soon normalise ^[3].

The case fails if the shortage outlasts the fade. Should memory pricing keep accelerating for several more quarters instead of normalising soon ^[3], the same discounted cash flow with a higher margin path prints a number above $1,012 ^[7]. The counter-thesis sits inside the note: the author grants long-term AI-driven demand and still rates the stock a Sell ^[5]. I would put more weight on the margin input than the demand input, because 85% gross margins in a memory business are a measurement of scarcity, and the valuation depends on how many quarters of scarcity you are willing to underwrite.

The note opens by conceding the bull case. It is "difficult to find a fundamental reason for a negative view on Micron Technology", the author wrote, and "The company is going through one of the strongest periods in its history" ^[13]. He disclosed no position in any of the companies mentioned and no plans to open one within 72 hours ^[6].