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Why SmileDirectClub Plummeted by 21% on Tuesday

By Eric Volkman – Nov 9, 2021 at 4:45PM

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Its top line shrank, its losses expanded, and it whiffed on analysts' estimates.

What happened

Tuesday was like a bad visit to the orthodontist for SmileDirectClub (SDC 9.54%). The teeth alignment specialist unveiled its latest set of quarterly figures, and investors found the numbers to be downright ugly. They punished the company by driving its stock price down by almost 21% on the day.

So what

While not every number in SmileDirectClub's Q3 report was discouraging, the most notable line items were not impressive. Revenue was down 18% year over year to $138 million. Its net loss deepened considerably, landing at $89.4 million ($0.23 per share) against Q3 2020's loss of $43.5 million.

Businessman making a sour face.

Image source: Getty Images.

Collectively, analysts were modeling for nearly $182 million on the top line for SmileDirectClub, and a narrower net loss of $0.13 per share.

The coronavirus pandemic is still a headwind for the company, as it has led many people to postpone elective healthcare procedures such as teeth straightening. Macroeconomic headwinds are also playing a role, the company asserted in its press release.

"While we could not have anticipated the rapidly evolving nature of this impact on our consumer, we have responded quickly to focus our marketing on helping support them during this time, while we also move upstream with higher income demographics," SmileDirectClub CEO David Katzman said.

Now what

SmileDirectClub's guidance didn't instill a great deal of confidence either. The company believes it will earn $630 million to $650 million in revenue for the year; it did not provide a forecast for net profit. In 2020, revenue came in just under $657 million.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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