SDC - SmileDirectClub extends losses as analysts weigh in on Q3 earnings miss

SmileDirectClub (NASDAQ:SDC) is trading ~23.1% lower in the pre-market, adding to the sharp losses recorded on Monday after the close in reaction to lower than expected financials released by the company for Q3 2021. With clear aligner shipments slowing to ~96.6K from over 100K in the first quarter, the softer volumes have caused gross margins to fall short of expectations, William Blair analyst John Kreger noted in reaction. “In the midst of a clear aligner category expanding at a 20%-25% pace, SDC’s strategy does not appear to be working,” Kreger added, observing a ~37% decline in the company volumes on a two-year stacked basis amid worsening EBITDA losses. Meanwhile, Goldman Sachs analyst Nathan Rich with a Sell rating on the stock, attributes the slowing demand to the competition and an end to government stimulus. However, noting an outsized impact for SmileDirectClub (SDC), Rich expects a rise in spending to “pressure profitability and FCF.”

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SmileDirectClub extends losses as analysts weigh in on Q3 earnings miss