SmileDirectClub, Inc. SDC is a direct-to-consumer focused teeth straightening firm that aims to challenge the orthodontics industry, as well as clear braces pioneer Invisalign. But SDC has largely struggled since its September 2019 IPO.
Wall Street Is Not Smiling
SmileDirectClub boasts it is the “first direct-to-consumer medtech platform for transforming smiles.” The company uses clear aligners to help customers straighten their teeth. SDC is part of the larger and growing e-commerce and DTC healthcare space.
SmileDirectClub offers consumers the ability to straighten, whiten, and clean their teeth, all without the need to leave their homes. The company now allows its clients to get a free in-person scan at one of its SmileShops, or utilize an at-home kit to create an impression. SDC aims to compete directly against Invisalign maker Align Technology, Inc. ALGN, offering direct comparisons on its website: “Doctor-directed teeth straightening for 60% less than Invisalign, guaranteed for life."
Despite a much-talked-about IPO, SDC has struggled. The company’s 2020 sales fell over 12%. SDC also posted an adjusted FY20 loss of $77 million, or -$0.72 a share. The pandemic clearly didn’t help SmileDirectClub and many on Wall Street are betting against SDC stock, with it pretty heavily shorted.
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Bottom Line
SDC fell short of our adjusted first quarter EPS estimate, posting an adjusted loss of -$0.12 a share. Zacks estimates do call for the company’s revenue to climb in 2021 and 2022, with it also projected to trim its losses.
However, SmileDirectClub’s EPS outlook has trended in the wrong direction (as the nearby chart shows) to help it land a Zacks Rank #5 (Strong Sell) at the moment. SDC shares have also fallen 35% in 2021, and they recently fell below their 50-day moving average.
The downturn comes in direct contrast to the broader market and Invisalign maker Align’s nearly 20% climb so far this year. Therefore, investors might want to stay away from SDC for now, or until it shows signs of a comeback.
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