So here's a fun one: a stock goes up after a prominent short seller announces they're betting against it. SanDisk Corp (SNDK) shares were up more than 3% in premarket trading Thursday, which is not the typical market reaction you'd expect after Citron Research, run by Andrew Left, published a bearish report and took a short position.

Citron made its case on Tuesday, arguing that the boom cycle for NAND flash memory—the stuff SanDisk makes—is approaching its peak. The firm pointed to a recent move by Western Digital Corp (WDC) as a warning sign. Earlier this month, Western Digital sold a big chunk of its SanDisk holdings in a secondary offering at prices roughly 25% below where the stock was trading Thursday. "Because they know the cycle is approaching a peak, and they're not waiting for the bell," Citron wrote.

The core of Citron's bearish thesis hinges on a familiar giant: Samsung Electronics Co Ltd (SSNLF). "Samsung has a 30-year history of choosing market share over margins," the report stated. "They wait for pure-plays like SanDisk to get comfortable at 50% gross margins, then flip the switch." In other words, when profits get too good, Samsung can flood the market, crashing prices for everyone. It's a classic competitive threat in the memory chip business.

Citron also pushed back hard against what it sees as overly optimistic investor sentiment. The firm specifically rejected comparisons some might be making between SanDisk and the AI darling, NVIDIA Corp (NVDA). "The market is pricing SanDisk like it's $NVDA. There's one problem: NVIDIA has a moat. SanDisk sells a commodity," Citron argued. It's a blunt assessment: one company has proprietary technology that's hard to replicate; the other makes a product that, at the end of the day, is largely interchangeable with its competitors'.

This comes as analysts note memory stocks are trading at a discount. Goldman Sachs analyst Ryan Hammond pointed out in a report Wednesday that memory stocks trade at just 12 times forward earnings on average, well below the broader market. SanDisk itself trades at 8.8 times forward earnings. This suggests the stock's massive 129.76% year-to-date surge has been driven by rising earnings expectations, not investors suddenly deciding to pay a higher price for those earnings (multiple expansion).

Citron wasn't convinced by talk of a memory shortage driving prices, either. The firm called current tightness "illusory," warning, "With double the capacity of the 2018 peak waiting in the wings, this 'shortage' is a supply mirage that can vanish in a single earnings call."

So, with a short seller ringing alarm bells, what are the bulls looking at? For one, the analyst community is still largely on SanDisk's side. The stock carries a consensus Buy rating with an average price target of $492.18. Several firms have been raising their targets recently:

• Citigroup: Buy (Raises Target to $750.00) on Feb. 2
• Barclays: Equal-Weight (Raises Target to $750.00) on Feb. 2
• Jefferies: Buy (Raises Target to $700.00) on Jan. 30

Investors are also looking ahead to the next earnings report, scheduled for May 6. The expectations show a dramatic turnaround story. Analysts are estimating earnings per share of $10.58, which would be up from a loss of 30 cents per share a year ago. Revenue is estimated at $4.37 billion, up from $1.70 billion year-over-year.

In the end, Thursday's price action sets up a clear battle of narratives. On one side, Citron sees a cyclical peak and a commodity business vulnerable to a pricing war. On the other, bullish analysts see a company executing a powerful earnings recovery, trading at a discount. For now, the market is giving a tentative thumbs-up to the bulls, with SanDisk shares trading at $653.80 in the premarket session.