SmileDirectClub drops 28% on its IPO, earning a (bad) superlative
First impressions... They're supposed to be SmileDirectClub's thing. Shares dropped 28% on its 1st day of trading as the unicorn transformed into a public company — that makes it the worst-performing major IPO since 2000. But it doesn't change its goal: "democratize access to a smile you’ll love."
"Serious concerns"... That's what orthodontists think of SmileDirectClub's biz model. The canine-disruptor has harmoniously combined online with offline to straighten teeth for less than those concerned traditional dental offices:
- "Telemedicine" = Online: SmileDirectClub sends you a tooth-mold impression kit to create a clear aligner, but your check-ups are done remotely through a doctor online — just like hair loss/ED startup Hims.
- "SmileShops" = Offline: It's built 300 aggressively-lit "SmileShops" if you crave hands-on, in person help with those biting molds.
- The Result: SmileDirectClub claims its treatment costs $1.9K (vs. $6K-$8K for traditional braces) and it takes 6 months on average (vs. 18 months).
The IPO was a failure, but getting there was a huge success... There are 2 types of investors - existing/early shareholders (like venture capitalists and Golden State Warrior Draymond Green) and new investors (anybody who bought shares at the IPO). While the new shareholders' stock fell on Day #1 (IPO stocks are volatile), the existing shareholders have enjoyed SmileDirectClub's value rise.
- August 20th, 2019: SmileDirectClub issued its S-1 statement to go public, last valued at $3.2B.
- September 11th, 2019: Investor enthusiasm during the week-ish long roadshow let SDC set the price of shares at $23, valuing the company at $8.9B.
- Yesterday: The stock price fell big, but its value is still almost $7B — more than double its last official valuation when it started the process.