SmileDirectClub 🦷 just IPOed [NASDAQ: SDC]

Some quick research on this very interesting company that’s just IPOed in the US. I may write more about it soon, running late for a meeting

SmileDirectClub (SDC) do direct-to-consumer :tooth: aligners (teeth straightening) :grimacing:, basically alternative to braces. Also teeth whitening. Also t-shirts with their mottos and logos (?). And lip balm.

This is a Nashville, Tennessee dentistry “tech” play :tumbler_glass:.

SmileDirectClub IPOed at $23 a share this week, but it is trading at currently around $18 :+1: (<- this is not a recommendation to buy).

The company still raised $1.3 billion at a $8.9 billion valuation.

How do you value this sort of thing?

I don’t know.

But it’s direct comparable are the makers of Invisalign clear aligners (traded as ALGN). Where is my Investment Banking Valuation book? https://www.amazon.co.uk/Investment-Banking-Valuation-Leveraged-Acquisitions/dp/111828125X <- Study with this book.

SmileDirectPlay even have a shop in London:

Nashville-based SmileDirectClub was founded in 2014 by Jordan Katzman and Alex Fenkell. One of them has had experience in direct-to-consumer stuff (1-800 Contacts, Quicken Loans). He’s also been on the board of Simplex Healthcare (a diabetic supply company).

Align Technology - the makers of Invisalign clear aligners - have had a 17% stake in the company since 2016. But since then Align Tech have become a direct competitor to SmileDirectClub :grimacing:. Awkward.

SDC operates in the US + 3 other countries via SmileShops + partner shops such as CVS Health, Walgreen Boots Alliance.

(Source - https://finance.yahoo.com/news/smile-direct-club-must-quickly-show-investors-profits-strategists-154433218.html)

Of course, there’s a complaint from the pros who could be right about getting our :tooth: straightened right, who knows:

In July, the American Association of Orthodontists, which represents 19,000 orthodontists in the U.S., Canada and abroad, said it had “serious concerns” about direct-to-consumer orthodontic products, including those marketed and sold by SmileDirectClub.

“Orthodontic aligners are meant to move teeth, which if not done correctly can lead to potentially irreversible and expensive damage such as tooth and gum loss, changed bites and other issues — some of which may not arise immediately,” the association said in a statement. The AAO filed complaints with 36 state dental boards and attorneys general last year, alleging what it deemed to be statutory and regulatory violations by SmileDirectClub.

(Source - MarketWatch - 5 Things To Know https://www.marketwatch.com/story/smiledirectclub-is-going-public-5-things-to-know-about-the-teeth-straightening-startup-2019-08-21)

The IPO did not go well at first:

Online dentistry company SmileDirectClub shares slid 28% on Thursday, the worst market debut for a unicorn start-up so far this year.

(Source - CNBC yesterday)

Share price of SDC since the IPO this week - with a current market cap at $12.2 billion (this is not the enterprise value (EV) as it excludes net debt):

Share price of Align Technology (Invisalign makers) - since the beginning - with a current market cap at $14.2 billion (not the EV value):

(Sources: CNBC)

Warning: do your research before you purchase SDC’s shares, their teeth-straightening and teeth-whitening products - your money and/or teeth are at risk - read about SDC vs Orthodontists and The Dark Side of Teeth Whitening)