What happened

SmileDirectClub (NASDAQ:SDC) didn't bring any smiles to the faces of investors with its third-quarter earnings update. Shares of the direct-to-consumer teledentistry company were crashing 18.5% as of 11:10 a.m. EST on Wednesday after it reported its Q3 results following the market close on Tuesday.

The company announced revenue in the third quarter of $180.2 million, up 50.6% year over year but well below the average analysts' estimate of $207.6 million. SmileDirectClub also posted a net loss in Q3 of $0.89 per share, badly missing the consensus Wall Street estimate of a net loss of $0.04.

Finger pointing to a frowning face icon on a touchscreen pad next to a straight-face icon and a smiling face icon

Image source: Getty Images.

So what

CEO David Katzman maintained that "Q3 was a good quarter." Based solely on the company's growth rate, he's right. SmileDirectClub reported strong 47% year-over-year shipment growth for its clear dental aligners. It even saw an increase in average selling price, from $1,773 in the prior-year period to $1,788 in Q3 of 2019.

But growth stocks must play a game of expectations -- and SmileDirectClub lost that game in the third quarter. The company's market cap stood above $4 billion prior to its Q3 earnings update. With no profits to show yet, that kind of valuation demands a pitch-perfect performance. As solid as SmileDirectClub's growth was, it wasn't as strong as investors expected.

This was the company's first earnings report after its initial public offering IPO in September. Things haven't gone well for the stock since then. But it's way too early to dismiss the company's chances of success. One disappointing quarter doesn't necessarily mean that it won't win the game of expectations in the future.

Now what

Speaking of the future, SmileDirectClub expects its full-year 2019 revenue will be between $750 million and $755 million. That represents 78% year-over-year growth at the midpoint of the range. It's also a little higher than the average analysts' full-year revenue estimate of $746.5 million. The company projects an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of between $73 million and $80 million for full-year 2019.

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