I hate to be the bearer of bad news, but it’s hard to find fans of Nashville-based SmileDirectClub (NASDAQ:SDC) nowadays. To a certain extent, that’s because SDC stock has been declining for most of 2021.
Admittedly, I’ve taken SmileDirectClub to task for the company’s mounting debt load. Meanwhile, InvestorPlace contributor Larry Ramer has noted SmileDirectClub’s “negative, fundamental characteristics,” and Tezcan Gecgil still sees competition in the teeth-straightening trade.
These concerns are duly noted. Still, the contrarian in me feels that SDC stock has over-corrected, and may be due for a bounce soon.
Call me a glutton for punishment, but I’m in the mood to defend SmileDirectClub today. So, let’s see if a bullish argument can be constructed in favor of this beaten-down oral-care contender.
A Closer Look at SDC Stock
SDC stock’s brightest moment of 2021 happened early on, as the share price popped from $11 to $15 in mid-January. After that, only the short sellers were smiling. Starting in February and continuing until the end of October, there were no massive short squeezes or relief rallies — only a prolonged downward trend. Lately, SDC stock has been flirting with penny-stock status, if we informally define this as a stock that trades for less than $5 per share.
What a terrible predicament for the early investors who bought the stock near $15, or even $10 for that matter. Is there hope for a reversal of fortune?
I don’t recommend waiting around for the Reddit short-squeeze crowd to rescue SDC stock.
If you believe in the company, however, there may be reasons to stay in the trade. So, with that in mind, let’s see if we can find something positive amid the wreckage.
Welcome to Paris
When your business isn’t thriving as planned in America, give other markets a try.
That’s the pivot, it seems, that SmileDirectClub is making as the company sets up its first France SmileShop in Paris, with additional locations reportedly to follow. With this venture, SmileDirectClub will have a market presence in seven European countries.
However, the French oral-care market could be a real moneymaker for SmileDirectClub. The company’s research found roughly 80% of French consumers saying that they have room to improve the straightness of their teeth, yet cost is the biggest barrier.
Compared to braces, SmileDirectClub’s teeth-aligning product apparently costs 60% less. So, its affordability could provide the company with a market advantage. David Katzman, SmileDirectClub chairman and CEO, emphasized his company progress in the region. “Since entering Europe in 2019, we have seen remarkable gains in consumer awareness of our brand and embracing of our pioneering teeth straightening solution, and we look forward to the opportunity to build on this momentum in France,” Katzman said.
SmileDirectClub Goes Global — and Mobile
Even as the company is busy straightening smiles in Paris and other far-off locations, SmileDirectClub is evidently coming up with new ideas to bring its product to the people.
Thus, in both the U.S. and the U.K., SmileDirectClub is trying out its innovative SmileBus concept. In fact, SmileDirectClub revealed that the United States Patent & Trademark Office will issue a patent for the SmileBus. It’s exactly what you think it is: a bus that can travel to various locations to deliver SmileDirectClub’s oral-care products/services.
Kudos to the company for getting creative, and for potentially solving a problem in dental care.
As SmileDirectClub Chief Legal Officer and EVP of Business Affairs Susan Greenspon Rammelt explained, “For far too long, access to orthodontic care was limited to only those areas that could support an in-person practice.” Now, with the advent of the SmileBus, “more communities than ever now have a premium, affordable, accessible option,” Greenspon Rammelt continued.
The Bottom Line
In analyzing SmileDirectClub, I purposely accentuated the positive today.
If you’re looking for something more pessimistic, there are plenty of commentators willing to offer that. On the bright side of the issue, we can say that SDC stock is quite cheap right now. Plus, the company is willing to try out new ideas, and explore multiple world regions.
So, it may be time for investors to consider SmileDirectClub. There could be profit potential here, so by all means, grit your teeth and give SDC stock a try.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.