SmileDirectClub (SDC) stock rebounds amid growth prospects concern

SmileDirectClub Inc. (NASDAQ: SDC) stock rebounded over 26% in the past month on bullish outlook after the launch of a suite of oral healthcare products exclusively at Walmart. The shares remained under tremendous pressure after a low of $7.72 on December 18, 2019. However, the traders were concerned about the company’s growth prospects.

Investors have regained confidence in the company as the venture into oral healthcare products could expand its horizon from the teledentistry platform to the healthcare platform. In early October 2019, the company’s growth prospects were a major concern for the investors due to the challenges in its business model.

The company has, on average, about 5 million unique visitors to its website every month and continues to invest heavily in sales and marketing to increase the number of individuals visiting its website. Also, the company expects to invest heavily in proprietary technology platforms, operations, and other processes to improve member conversion from website visitors.

SmileDirectClub plans to continue investing in its business to support future growth by focusing on strategies that best address large market opportunities, both domestically and internationally. The company will continue to explore collaborations with retailers and other third-party partnerships as a component of its expansion strategy.

The company is expected to incur higher revenue driven by an increase in a number of website visitors and conversion thereof to aligner sales, along with an increase in sales and marketing spend. The increase in digital and media advertising and branding efforts, as well as the expansion of SmileShop locations, are likely to drive the growth for the balance of 2019.

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As of September 30, 2019, the company had an accumulated deficit of $88.3 million and had working capital of $572.8 million. The current liquidity, including net proceeds received in connection with the IPO, will be sufficient to meet projected operating, investing, and debt service requirements for at least the next twelve months.

For the third quarter, SmileDirectClub posted a wider loss due to higher costs and expenses despite a 51% jump in the top line. The unique aligner shipments grew by 47% and the average aligner gross sales price rose by 0.85%. For fiscal 2019, the company expects revenues in the range of $750-755 million and a negative adjusted EBITDA of $73-80 million.

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