Western Digital [WDC]
Spot $453.09 (Alpaca last trade, 2026-07-29). No position verdict — the book decides.
| Value | |
|---|---|
| Trailing 252-day realised volatility | 75.4% |
| Trailing 60-day realised volatility | 94.9% |
| Drawdown from 252-day peak close ($746.23, 2026-06-18) | −38.1% |
Realised vol of 94.9% over 60 days is extraordinary. No options chain was priced in this run, so no IV−RV measurement exists and no options structure is admissible. Stated as absent, not asserted. A LEAP requires that measurement by rule; a 60-day realised vol near 95% also means any long-premium structure carries very large absolute cost.
One structural note that matters for any option work here: ~40m shares of the 385m diluted count come from an in-the-money convertible. Delta-hedging flow from the convertible arb community is a real component of this name's realised vol and is a reason to be cautious about assuming a stable vol surface.
Vehicle: common equity.
| Level | Price | Basis |
|---|---|---|
| 252-day peak close | $746.23 | 2026-06-18 |
| Street average target | $655.50 | AV OVERVIEW, likely set into the June high |
| Bull target | $600 | 30x FY2028E EPS $20.00 |
| Base 12-month target | $480 | 24x FY2028E EPS $20.00 (+5.9%) |
| Spot | $453.09 | 2026-07-29 |
| Price at which the 5-year implied path clears at management's own >25% exabyte CAGR | ~$305 | 12.4x warranted exit, 34.5% terminal margin, 25% CAGR |
| Bear target | $240 | 12x FY2028E EPS |
| Downside case (named cause: HAMR slip + flat LTA renewal) | $173 | −62% |
The critical number is ~$305. Above it the position requires a terminal multiple above the warranted one; at or below it the business alone carries the return. Note this is a higher clearing price relative to spot than Seagate's (WDC clears at 67% of spot, STX at 52%), which is the quantitative form of the −8.3pp vs −14.8pp implied-path margin difference: WDC's five-year math is better than Seagate's, while its twelve-month math is worse. Both statements are in the numbers and neither should be smoothed over.
Evidence grade: A on accounting quality (DSO improved 6.6 days on +45% revenue — the single cleanest result in this cluster); A on capital structure (net cash, investment grade, verified against the 10-Q); B on mechanism (LTAs to CY2029 are real, but HAMR is behind); C on the multiple (UNIDENTIFIED, ~5 quarters of same-basis history).
Per valuation.md rule 5, the C on the multiple reduces position size; it does not reduce the terminal
margin, which stays at 34.5%.
Correlation warning: STX, WDC, MU, SNDK are one exposure. They moved together today (MU −12.8%, SNDK −9.5%, WDC −2.3%, STX +2.2%). The book must apply a single cluster limit across all four, not four single-name limits.