SmileDirectClub plummets (another) 13% on California's new ortho-regulation
Everyone gets a trophy... including SmileDirectClub. The worst new stock of 2019 is now down 53% from its IPO day. SmileDirectClub embraces "telemedicine" to straighten your teeth, using clear aligners and online video chats to replace painful in-person ortho appointments. But the stroke of a governor's pen just made its life a bit harder.
AB-1519 will see you now... That's the California bill just signed into law. It adds additional regulation for SmileDirect to deal with while providing additional protection to aspiring grinners. Now the state Dental Board will oversee all things teeth-fixing — this doesn't ban SmileDirect's business, but investors are still unhappy.
- Your neighborhood orthodontist: She's getting disrupted by SmileDirect's straighten-from-home biz model. She also thinks braces deserve in-person, un-rushed attention.
- The dental lobbyists: They represent that community of concerned orthodontists, so they encouraged California's government to make the move.
- Your canines: They're not affected. Yet. SmileDirect said it will keep operating in California, but the bill “will create unnecessary hurdles and costs."
SmileDirectClub predicted this... A company's IPO filing paperwork (aka its "S-1") is released before its stock first begins trading, highlighting the business' risks and opportunities. SmileDirectClub's S-1 mentioned this exact concern: “Adverse changes in, or interpretations of, laws and regulations governing remote healthcare and the practice of dentistry."
The dental pros resisting SmileDirect are better-funded and organized than the taxis that resisted Uber...