SmileDirectClub stock tanks after releasing its earnings report

SmileDirectClub’s shares tanked by as much as 20% on Wednesday
in midday trading after the company released its first quarterly report since
floating its shares in September.

According to the quarterly
report released by the company which deals in teeth aligners, loss per
share for the quarter stood at 89 cents and revenue of $180.2 million vs.
$165.4 million as forecasted by Refinitiv consensus estimates. SmileDirectClub
reported a third-quarter net loss of $387.6 million compared to a net
loss of $14.95 million a year ago.

“You can expect us to continue to fight in order to protect the
access to care that consumers want and deserve,” SmileDirectClub CEO David
Katzman told analysts on a conference call reviewing its earnings.

The company’s full-year prediction indicates that it expects to
pull in revenues of between $750 million and $755 million.

When the company made its first debut in September, its shares
slid 28% on its first full trading day, recording the worst ever performing
unicorn this year with a valuation of more than $1 billion.

Today, shares of the company are trading at $8.89, a sharp drop from its IPO
price of $23.

The 2014-founded start-up retails teeth aligners directly to its
consumers on its “Smile Shops” and website. The products retail at an average
price of $1,895 for a two-year plan.

Founders Fenkell and Jordan Katzman are confident of
disrupting the orthodontics sector with affordable teeth-aligning solutions,
convenient door-to-door deliveries, as well as targeted social media
advertising.

SmileDirectClub’s quarter four projection fell short of analysts’ estimates,
casting doubts on the company’s ability to meet investors’ expectations. Various
analysts led by Glen Santangelo at Guggenheim on Wednesday questioned the ability
of the teeth-aligning firm to meet its next year’s projected revenue of $1.2
billion, with some describing it as being “too ambitious” considering its current
growth rate.

Compared to last year’s third quarter legal expenditure, this year’s
has doubled following a series of newly introduced regulations for online dentistry
operators. Other notable items of expenditure include a one-time charge of $324
million related to stock-based compensation and a $6 million charge related to
its IPO costs.

The share price of the company closed the market at $8.83 on Wednesday,
depicting approximately a 61% drop from its $23-IPO price.