DRAM ETF Inflows Jump Despite Micron, Sandisk, Seagate Slump

The Roundhill Memory ETF (CBOE: DRAM) has slumped and moved into a technical bear market as concerns about the memory industry continued. It ended the week at $52.7, down by over 35% from its highest point in June.

DRAM ETF Inflows are Rising

Americans are still buying the ETF despite the ongoing volatility in the industry. Data shows the fund has had net inflows of over $10 billion in the last 30 days and $2.5 billion in the last five. The fund has had over $23 billion in assets in the last three months.

DRAM ETF inflows | Source: ETFdb

This week’s inflows were notable as they happened in one of the worst weeks for memory companies in years. In South Korea, Samsung Electronics and SK Hynix stocks have dropped by over 30% from their highest levels this year. 

Samsung stock slipped even as media reports suggested that it was considering launching its American ADRs. Just recently, SK Hynix raised over $25 billion by debuting its ADR in the US.

In Japan, Kioxia Holdings stock dropped to 52,110 JPY, down by 53% from its highest point this year. The same is happening in the US, where memory bigwigs like Micron (NASDAQ:MU), SanDisk (NASDAQ:SNDK), and Western Digital (NASDAQ:WDC) have all dropped by over 20% from their peak.

These stocks have plunged despite some important developments in the industry. Recent data shows that memory prices are still rising as demand remains resilient. 

At the same time, earnings by some of the top companies in the industry have continued soaring this year. Micron’s revenue jumped by over 300% in the fiscal third quarter and the management expects it to hit $50 billion in Q4. Samsung also released robust numbers, while analysts expect companies like SanDisk and Western Digital to publish strong numbers.

Roundhill Memory ETF Going Through Profit-Taking

Therefore, the ongoing weakness of memory stocks is likely because of profit-taking since most of them jumped by triple digits. DRAM, which was launched in April, rose 188% from its April low to its highest point this year. It is common for well-performing stocks to experience a short-term correction. 

The ongoing DRAM ETF pullback also highlights one of its biggest risks: concentration. According to the fund’s website, Samsung, Micron, and SK Hynix account for more than 75% of its holdings. 

As a result, a significant setback at any one of these companies can have an outsized impact on the fund’s performance. Moreover, because all of its holdings operate within the same industry, any broader downturn affecting the memory semiconductor sector is likely to weigh heavily on the ETF.

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