The topic of our discussion today is **Smile Direct Club, Inc.**
I don’t want to make you fall asleep reading this DD, so I will be very short and precise..
* **Why it got my attention?**
***Number 1:*** One of my relatives used it recently, during the pandemic, to fix the gap in his teeth and it really worked! It was waaaay cheaper than any other of the alternatives available on the market. ***Number 2:*** My cousin told me to buy it when they first went public but I hesitated, now the price is incredibly attractive. ***Number 3:*** Short interest play. Currently it has estimated 31-35% short. **Number 4:** Future growth is very promising.
* ***What is SDC?***
**SmileDirectClub** is a teledentistry company that provides dental services. Its clear aligner treatment addresses orthodontics market. It offers doctor-directed teeth straightening for **60% less than Invisalign** and it is guaranteed for life. Their product is a direct competition of traditional braces and other clear alignment solutions. In other words, SmileDirectClub is the dominant company in the direct-to-consumer ‘clear aligner’ orthodontic market, where its brand competes with traditional metal braces (‘wires and brackets’), doctor-directed clear aligners (most notably Invisalign brand), and other direct-to-consumer vendors. SDC’s revenues come primarily from the clear aligner products (‘cases’ or ‘trays’) used to treat malocclusion (crooked teeth and other dental cosmetic issues), with some additional revenues from ancillary products.
* **Financial forecast:**
Financial forecast is positive given that the economy is reopening, people don’t want to wear masks anymore and the demand for a cheaper alternative of traditional braces and other more expensive clear alignment solutions is gowning. 3d printing technology becoming cheaper and more efficient. Expansion in international markets will accelerate their revenue growth even faster.
* **Price action compared to ALGN:**
If we compare these two, SDC has enormous upside. ALGN had the same price action back in the day.. was trading in the teens and was heavily shorted. Once they turned profitable the stock exploded and never looked back. SDC is about to turn into a profitable company as well. Has great outlook and their product is 60% cheaper than that of ALGN.. so with time it will eat their market share.
* **Bull case:**
– 3d printing technology is growing rapidly. SDC will greatly benefit from this and reduce their margins.
– Plus, SDC announced that it will continue its international expansion with openings in Singapore and Austria. Entrance into these markets will further extend the Company’s international footprint following its successful launches in the United Kingdom, Ireland, Australia, New Zealand, and Hong Kong in 2019 and Canada in 2018. Additionally, the Company is reopening in Germany, and plans to launch into new regions throughout Europe, Latin America, Asia Pacific and more..
– Will most likely take market share from more expensive teeth strengthening solutions.
– ***Potential short squeeze play:*** It has high short interest (over 30%) and it is relatively low float (total 103,5M).
* **Bear case:**
– Their main competitors will try to compete with SDC via reducing their prices as well.
– Recently, SDC suffered from a cyber attack (like many other companies) which damaged their reputation and the price of the stock suffered from it as well.
– Some negative reviews from some customers due to no direct contact with a dentist.
* **Conclusion:** This is not a financial advice. DO YOUR OWN DD. In my opinion SDC has great potential if they do the things right. At current level SDC stock price has enormous upside potential with little downside. My current position is 1300 shares. I will load up on calls closer to the earnings which are on AUG 09.
(For my fellow apes with little attention span: check ALGN first and then: **SDC** 🚀🚀🚀)