SDC: Let’s put a smile on that face!

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** 🚀🚀🚀)

What do you think?

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  1. Remember people… this isn’t a US based play. This isn’t a blue chip best in breed play. This is for the 100 billion kids in brazil who will need straight teeth for IG and tocktick. This is an emerging market play for every last soul that can afford an iphone 17 but not invis. This is hotdogs compared to prime ribeye.

  2. I would dodge this one for couple reasons.
    A. When you go to a dentist, 9/10 will advise you against using SDC because of no proper rvaluation and most importantly – supervision. While there is some ppl who might decide to switch their strategy from yoloing into fds to yoloing their teeth, most will check with specialist first.

    2. Invisalign which is their main competitor not long time ago had their patent expire. Prices dropped along the line here in canada by about 1k maple rubles. Id think same happened everywhere so it did get a bit cheaper
    3. Too many negative reviews from clients who had bad experience resulting in permanent damage

  3. Okay – so a lot of people miss this point:

    When you go to a dentist/ortho, they normally take a panoramic… often they will also take a ceph too as well. You can also get some who take a CBCT.

    Why? So digital scanners are ubiquitous as they scan tooth surfaces. These are common practices in dental offices. What SDC does not take are the radiographs. Radiographs tell you several things:

    1) if your roots are tangled. If they are, then you move them, you can have root resorption and you lose your teeth.

    2) where are structures inside of your alveolar bone (upper/lower jaws). for example, there is the Inferior Alveolar Nerve (IAN). If it passes through a long root or your roots extend too much and you damage this nerve, you will have facial paralysis

    3) speaking of alveolar housing – this is the bone your tooth roots sit in. When you scan with the optical scanner, you don’t know where the bone is nor while taking physical impressions. There is nothing in the software that knows where this bone actually is, just your gums. So what happens? You can accidentally move the tooth root out of the bone and you will lose those teeth

    4) people say “straighten” but they think about the “front 6” (canine to canine). Anyone can straighten those but your bite could still be really f-Ed up. Class 2 or class 3 – it could be a skeletal relationship so you actually need surgery to correct the bite prior to braces (orthognathic)

    These are just a few very simple cases and then ultimately with liability you have issues of standards of care etc. what sucks is people go for the $1600 discount and have no idea their teeth or bite gets fucked. They won’t know for years.

    So you pay $1600…. but oh wait need a dental implant and crown? $4k later. Or oh you needed orthognathic surgery? Well you’ll then need to pay an orthodontist the full rate afterwards.

    SDC model isn’t “disruptive” – it has some considerable flaws. Sure if slight “tipping” is all that’s needed then that works but the average consumer has no idea.

    The end. God speed.

  4. My dad is a retired dentist and I used to help him submit cases to Invisalign back in the early 2000s before it was widely adopted. For minor work, it could be done with only the trays. However, people that really need orthodontics will need to have buttons or attachments bonded to their teeth so that the trays can be positioned properly. Results without a directly interfacing with a dentist are going to be sub-par and applicability will be limited. I hope SDC has a good legal team because I can see a very valid malpractice argument being made against any company going direct to consumers with tele-health for orthodontics. Dentistry and orthodontics are very hands-on if the practitioner is worth a shit. There are serious limitations and liabilities associated with cutting out the only person in this process than can physically make adjustments, check clearances, and bond attachments to teeth.

    Sorry but this shit is cheap for a reason.

  5. SDC will be buried in lawsuits if their volume grows. Unsupervised teeth manipulations can cause a lot of problems, and people will be eager to get a nice settlement from the big corp.

    For example, just take a look at the /r/SmileDirectClub and see people asking advice whether they should proceed with the treatment or not. That decision should definitely made by a professional, not by anonymous internet people.

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