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Well holy smokes folks this ain’t no dang jokers yes sdc smile direct club is four dollars a share wow what a move down for smile direct club here after hours we get to discuss the stock what’s going on with the stock the underlying fundamentals of the company as they just came out with earnings we’re going to discuss those we’re going to discuss if i’m buying this
Stock in after hours trading any moves i’m making in regards to this and will i be buying this stock tomorrow or am i staying away from it so i hope you guys enjoy this video as always all i ask in return is that you smash that thumbs up button that helps out huge youtube algorithm it lets me know you guys enjoy me uh you know discussing a stock that’s just getting
Absolutely obliterated so you know as of today the company’s trading right around a two billion dollar market but let’s be quite honest tomorrow this should be a one point something billion dollar market maybe 1.5 1.7 billion dollars so yeah the stock has been absolutely devastated and it’s not like it just you know this is the only hit it’s taken so look at this
Stock okay basically and when the market was flying high with a lot of the smaller cap stocks like an sdc right this stock hit like 16 a share and since february the stock went from about 16 to now after i was trading four dollars a share and actually uh technically at one point after hours it was like 399 so it actually did hit the threes in after hours trading
Right think about that for a moment in a matter of months and that’s how quick things can happen in the stock market where you know stock can be high flying now keep mind you like this doesn’t just happen to apple stock or something like that or a more stable company right this isn’t going to happen on google or facebook or something like that but when you get
Into some of the smaller cap companies this is the type of stuff that can happen like you can lose 60 70 80 and a snap of fingers right on the flip side and i covered this on my video earlier uh today right voyager stock there’s a stock i was down like 90 000 on down you know like 90 dollars i was down in that stock right and then in a matter of like two weeks now
I’m up fifty thousand plus dollars right so you gotta understand with some of these smaller companies it can get bad really really dang fast and men can get good really really fast right and so smile direct club man just vicious i mean it is a vicious fall for the stock nonetheless now let’s look at their earnings okay uh here let me just tell you the earnings
Are trash trash trash trash okay i’m not talking about trash as in you know like put it in the recyclable bin i’m talking about trashes and put it in the regular trash can okay take it out to the landfill total revenue of 138 million dollars that’s decrease of 18 year-over-year net loss of 89 mil that’s a decrease of 105 year-over-year adjusted even a 54 million
Dollar loss there diluted eps at 23 cent loss a decrease of 109 year-over-year total revenue year-to-date a little better news okay total revenue of 511 million increase of 8.3 over a year period net loss massive 240 mil that’s an improvement sadly enough adjusted ebitda loss of 72 million dollars in improvement of 13 million over the prior year period diluted
Eps loss of 62 cents that’s sadly enough an improvement okay so you just say the year-to-date numbers are horrible they’re getting a little better across the board however this latest quarter oh man i mean ugh it’s got to be one of the worst quarters i’ve seen any company report in quite a while needless to say okay i mean that is bad on bad on bad on bad like i
Said this isn’t the recyclable bin this is the regular trash is nasty okay no key operating metrics third quarter unique aligner shipments of 69 906 third quarter average aligner gross sales price asps okay of 1900 for the third quarter compared to 1794 so if you want some a small bit of good news that’s what might be the only good news you find in this whole dang
Quarter okay is the fact that asps at least were up by about a hundred and six dollars on average versus the same quarter a year ago okay so that’s good quote we are disappointed with our third quarter results driven by the macroeconomic headwinds that are influencing the spending of our core demographics said david katzman the ceo and chairman of smile direct
Club while we could not have anticipated the rapidly evolving nature of this impact on our consumer we have responded quickly to focus on the marketing and helping support them during this time while we also move upstream with higher income demographics through the challenger campaign and investments in our dental partner network is going to be very very key for
Them we remain incredibly optimistic and believe we are well positioned to continue to capture the global opportunity in the rapidly expanding market for clear aligners so essentially what has happened over the past uh you know few years let’s say right you have a line technologies invisalign which has just been a b stock and been a beast business model okay and
They just you know smile direct club’s gone nowhere in terms of their stock price business model anything like that and meanwhile alliance just went to the moon literally like if you got in that stock 10 years ago like that’s all i have to say about that even five years ago the gains have been ridiculous small direct clubs getting out competed across the board
Recently over the past couple years okay doesn’t mean it’s going to continue like that it’s just that’s the way it’s kind of worked out over the last uh let’s call it a few years samael direct club chief financial officer kyle willis the third quarter this is his quote the third quarter results do not fully reflect the investments we have made to grow our brand as
A macroeconomic environment for our core demographic along with apple privacy changes earlier this year have presented significant challenges to digitally native brands such as smile direct club hey you know what i think this is the biggest negative thing for their business model the apple privacy changes okay here’s what’s going on here apple changed their their
Privacy you know uh basically policy for apps like facebook and other social medias and guess what for smile direct club that was key that they could use facebook and other social platforms to advertise to folks and get a lot of data and and hopefully get a pretty good roi right the issue is apple’s totally changed everything and so now smile direct club has to
Figure out how the heck do we get to people’s faces right to the right people’s faces spend accordingly and grow the business and hopefully do it in in somewhat of a profitable way in future years right they’re not going to get there right now i can tell you that much but in future years get to profitability with this new challenge of apple privacy okay and so you
Have a that in my opinion is the main negative driver for this company right now they say we have a product and service offering that is highly competitive with the incumbent in our space align technologies at a significantly lower cost and a true differentiator compared with teledental street competitors the liquidity in our balance sheet is very important the
Liquidity in our balance sheet and the strengthening of our brand will allow us to execute on our lead strategy and change the composition of our marketing spend to more efficiently and effectively drive long-term growth which is key right and like i said at the end of the day this all in my personal opinion once again i you know i can’t be an executive of that
Company but i can tell you if i was to get in there and look at things i would say more than likely this the apple privacy changes has has created a real issue for smile direct club’s business model in the short term and they’re trying to adjust to it right now that is my personal opinion and obviously they mentioned it i just think they should have like mentioned
It like 10 more times because i think it’s a huge deal nonetheless as far as full year 2021 guidance for the company the company expects total revenues to be in the range of 630 mill to 650 mil while macro economic trends persisted into october 2021 from a demand perspective the company notes that the business can be highly variable from month to month quarter to
Quarter basis right i mean i’ve seen this company you know reporting horrible numbers and also they start reporting great numbers and it’s like whoa everything’s great and then oh oh now things just tanked again so i’ve seen that a few times with this company the assumptions underlying the revenues estimates include q4 revenue expected to be in the range of 120
Mill to 140 mil a continuation of the macroeconomic headwind that was evident in q3 into q4 a small ramp in germany and spain as we continue to onboard more locations and increase marketing investments as we have continued to expand our challenger campaign and as a result of ios security changes on targeting effectiveness we have changed our lead strategy to be
More focused on higher funnel leads through our platforms such as tv this strategy is expected to have an impact on our marketing effectiveness at driving near-term revenue but be more effective and efficient at driving long-term revenue growth so that is key so basically you know short-term stuff they’re trying to work through all this at the end of the day okay
And so needless to say quarter was trash okay we know that okay now let’s let’s let’s take ourselves away from the quarter uh for a moment here right and if we just view smile direct club as a company you know is this company gonna grow significantly over the next five ten years absolutely in my opinion is there service and product needed out there in the market
Absolutely right they come in at a cost far lower than a line right the traditional company that’s competing in this space and so absolutely there has to be you know two big dog players in this market and smile direct club will be one of those players right it’s just the flat out honest truth is the business model is in a very very tough place in the short term and
That’s why this stock is four dollars after hours okay that is why okay so now here’s this is this is key okay on liquidity smile direct club retains approximately 263 million dollars in accounts receivable and 308 million dollars of cash on the balance sheet okay now what you’re seeing there is key guys because if you’re talking about a business model that’s in
Distress it’s like smile direct club where revenue just went down 18 year-over-year where they’re taking big losses you know uh if i’m going to be in the stock rate i have to feel comfortable that they have enough money to get themselves to a place where the the revenues start going up again and hopefully the company goes from taking massive losses to making
Actual profits on the bottom line right even if it’s a small profit that’s a huge change right and so needless to say this company is in a very very strong capital position as of today okay and they need that capital because you know there’s a lot to work through here no doubt the conference call went on live i haven’t gotten a chance to listen to it i’ll likely
Listen to it on the hungrybull app of the hungry bull download on your ios and android store now i’ll likely listen to it on the hungry bowl tonight and uh get my full opinion as far as the conference call goes there okay now this is very very important okay in regards to smile direct club you’re gonna hear uh you know there’s a lot of folks that are you know short
Sellers of smile direct club huge short interest on this stock a lot of people are short so you’re gonna hear everybody saying this company’s going bankrupt they’re going to zero they’re going to one dollar going two dollars stuff like that right i was on the the tesla message boards last night and you know people like it’s going in tesla’s going to 800 opening
Bell you know you read stuff like this bloodbath today at market opens gonna be negative 25 plus you know just whenever a company’s you know caught in a tough position for whatever reason right whether it’s a ceo tweets that they’re gonna sell some shares or whether it’s a situation like this where they reported trash earnings you’re gonna have everybody say the
Stock’s going to zero it’s gonna go down you know another 50 or something like that and not to say it can’t because those are always possibilities right but just understand you’re going to see that sort of stuff out there okay now in terms of me what did i go ahead and do with this particular stock well here’s the thing you got to remember right think about this
For a moment in regards to stock market if your stock has extremely high expectations and a flying high stock price that’s shooting off right all it takes is you to just kind of disappoint a little bit and that stock goes down and so this is why a lot of times if people are in a stock and they see the company report a beat on revenue a beat on eps and even a beat
On future revenue and the stock price will go down people like what the heck man they beat all their numbers well if you have a high flying stock price and expectations are sky high if you just like don’t come in with these ridiculous numbers your stock price falls right now on the flip side when you have a beating down dog stock like smile direct club certainly
Falls into that category right the expectations are through the floor right no one expects anything from this company right like nothing now all small direct club is has to just say something a little positive in future quarters they just have a little little decent numbers little improvements in revenue and profitability and margin and expanding the business
Model and things like that as long as they report some small things the stock price can boom because the expectations are there are no expectations for the stock it is bad bad bad right the analysts are all gonna bring down their numbers in a massive way likely tomorrow for not just this year but next year as well and so you’re gonna have this dog pile of just
Negativity around smile direct club no expectations and that’s gonna be that right and so now you’re gonna have this stock that is a three four whatever five dollar stock whatever it’s trades out over the next few months and just wall street’s gonna not gonna be there there’s just gonna be like we don’t expect anything for this company and as long as in 2022 they
Report some glimmers of hope the stock will likely fly in that situation right and so i look at the stock as a 2022 2023 play that i’m looking at and i actually want to build a pretty decent sized position in the stock because i’m looking at it and i’m thinking okay i think a lot of their their customers are going to come back i think they’re going to have already
Worked through the apple stuff over the next couple quarters right and so in the middle of 22 into the back half of 22 and into 23 i think this company is going to start reporting some very positive stuff and the stock price i mean when you’re a three four five dollar stock it doesn’t take a lot of positivity to also move your stock back to double digits right and
Also you get a quick gain real nice you know and like i said long term i expect this this is a business model that’s here to stay in my personal opinion okay and they’re in a good capital position to work through this tough time so i never buy stocks after hours but with this one i went ahead and bought shares after hours okay about eight thousand eight hundred
Dollars after hours this one was at four dollars even then i went ahead and bought more shares because i thought about it and i was like i think i’m gonna buy some more so i bought five thousand more shares at four dollars and four cents after hours and like i said i don’t usually make after hours moves it’s very very rare but this stock is down 22 24 25 after it’s
Already been you know we looked at that stock it was 16 back you know in february and it’s four bucks and even trading under four for a little bit so i said you know let me go ahead and let me buy some shares after hours so i went ahead and did that okay now as far as tomorrow i’m not done buying this stock uh if it goes to below 390 tomorrow i will likely keyword
Is likely more than likely buy some more shares of smile direct club if it’s lower than 390 tomorrow okay if it’s uh you know 410 450 something like that i’ll just hold the shares i currently have and uh we’ll just kind of play it how it goes and we’ll see if it drops anymore you know this upcoming week or whatnot but that’s basically my plan if it’s lower than
390 tomorrow i’ll probably buy another 5 000 shares or so tomorrow if it’s under 3.90 if it’s not and it’s you know 420 430 hey 420 430 440 450 i’ll probably just hold what i currently have and wait to just see if there’s any more that shakes out of there but needless to say it was an ugly ugly after hours and i think there’s going to be a lot of folks attracted
To this stock now that it fell so dang much after hours i think there’s been a lot of people kind of keeping an eye on smile direct club they haven’t invested that are just kind of waiting for that that big massive you know what if you i don’t want to call this the last big downfall of smile direct club because it certainly might not be right uh it just feels like
You know it’s pushing that way and so i think a lot of folks have been watching this one and i think there’s going to be a lot of new shareholders that emerge tomorrow and as far as a lot of folks selling out i honestly don’t see a lot of retail selling out because i think a lot of folks that have gotten in the stock over the past couple months as it fell from you
Know six dollars to five dollars to four dollars i think a lot of those folks are kind of looking at this and they were playing this as a 2022-2023 play anyways so whatever happens in 2021 i don’t think people really care about it to be completely honest this move after hours is likely a wall street move the reason it’s traded down to four dollars is likely not
Because retail investors all were like sell sell this is likely wall street selling the stock there’s a huge short interest on this stock and we know the short sellers like to play games okay and so we’ll see what happens in tomorrow’s trading i’m ready to go if the stock falls there i do have to obviously keep ammo around because tattooed chef’s reporting this
Week honest was reporting this week i don’t know if either of those stocks will fall probably not but if they do i got to be ready to buy those as well so that’s why i can’t go too crazy but i will tee up 5 000 plus shares likely if this stock is below 390 tomorrow so anyways that’s smile direct club i hope you guys enjoyed this video as always risk reward is key
I can’t risk too much in the stock because they’re not in a good place with their business model right now so i got to uh you know i i think there’s a big reward here but i can’t go too crazy so if you’re wondering why i don’t make this into a half million dollar or a three-quarter of a million or a million dollar position it’s because absolutely this stock has uh
You know significantly more risk than most stocks i get into so hope you guys enjoyed this video as always all asking returns if you smash that thumbs up button let me know you guys enjoy a video like this where i get into a beating down dog stock hungry bowl if you haven’t got a chance to download it on your ios and android store you can listen to earnings calls
Right inside the app i’m gonna likely do that with the with the smile direct club earnings here uh because i think we should have that up tonight so sec reports the financials news all those sorts of things much love as always guys and have a great day
Transcribed from video
SDC STOCK is $4. BUY NOW?! By Financial Education
