SmileDirectClub (SDC) stock drops to lowest since IPO amid growth prospects

Shares of SmileDirectClub Inc. (NASDAQ: SDC) plunged over 52% to $7.17 on Thursday, which is the lowest since the initial public offering on September 12, 2019. The investors remained unsatisfied with the company’s weak performance during the fourth quarter of 2019 but international expansion is the key to future growth.

The company continues to be impacted by high customer acquisition costs and other general and administrative costs despite margins showing slight improvement. Also, the company faces legal and regulatory challenges in the US and this is expected to impact its expansion plans for international.

For the fourth quarter, SmileDirectClub reported weak bottom-line results due to higher marketing and selling expenses as well as an increase in general and administrative expenses. However, the top line increased by 53% backed by an increase in the unique aligner shipments.

The company is expected to increase its focus on the international infrastructure as it has already built to best position its business for long-term global growth. For 2020, the company is likely to focus on profitability by expanding its position worldwide and costs leverage.

SmileDirectClub continues to cultivate relationships with major insurance providers and strategic partnerships with retailers. However, the company’s results fell short of its expectations due to inefficiencies in manufacturing, operating, and inefficient back-office processes, which lifted the general and administrative expenses higher.

Over the next few years, the company continues to support substantial of its infrastructure investments in international expansion, meet elevated legal and lobbying expenses, and maintain its position in the oral care space. Despite this, the company is needed to act on the shipping delays that have a broad impact on customer experience.

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In the past three years, the company has invested heavily in expanding the membership base for establishing itself as a provider of clear aligner therapy in North America. The company believes the investments are likely to pay huge dividends as the expansion progresses globally in the future.

The stock slowly recovers as the market nears the closing from the record dip earlier on Thursday. The company’s performance outlook remained negative in the short-term and medium-term while turning neutral in the long-term. The market experts believe that the international expansion plans could drive the company towards profitability in the future.

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